Opec+ crude output jumped 730,000 b/d in June

Opec+ crude production rose at the fastest pace in nearly two years last month as Russian output rebounded, but the group was still way below target.

Production from the 19 Opec+ deal participants increased by 730,000 b/d to 38.26mn b/d in June, according to Argus' survey. This was more than 2.5mn b/d below the group's target for last month. The coalition is in the final stretch of nominally unwinding the roughly 10mn b/d of cuts it implemented in May 2020 in response to the Covid-19 pandemic. It is due to deliver a further 648,000 b/d quota boost in each of July and August.

The lion's share of the June hike came from Russia, where output rose by over 550,000 b/d as higher domestic refinery runs offset a decline in seaborne exports. Russian refinery runs increased by nearly 500,000 b/d last month, figures reported by state news agency Tass show. A jump in refinery-level fuel oil stocks suggests the return of some of Russia's less complex capacity.

Opec's two largest producers, Saudi Arabia and Iraq, also increased output sharply as direct crude burn at power plants rose on the back of rising seasonal demand for air conditioning. Analysts estimate Saudi crude burn reached or exceeded 600,000 b/d in June, not far off last year's peak of 691,000 b/d in July. Iraq's crude exports went up by 124,000 b/d to 3.76mn b/d in June, according to Argus tracking, in line with oil minister Ihsan Ismael's 3.8mn b/d target for the month.

Higher production in the Middle East and Russia was partially offset by declines elsewhere. Output from Kazakhstan, the non-Opec contingent's second-largest producer, dropped by over 300,000 b/d, driven by maintenance at the Kashagan field. Kashagan is due to restart on 15 July, although a Russian court order to close the Caspian Pipeline Consortium (CPC) terminal near Novorossiysk may disrupt that schedule.

Azerbaijan's crude production fell by 30,000 b/d after the East Azeri platform at the BP-led Azeri-Chirag-Guneshli complex in the Caspian Sea was shut for maintenance in the second half of June. African countries also saw some declines, with Nigerian output hitting a 17-month low. A drop in shipments of Nigeria's key Qua Iboe and Forcados streams exacerbated ongoing disruption to Bonny Light exports, which have been under force majeure since the middle of March.

Output from quota-exempt Libya fell further last month as port and field blockades continued to take their toll. A recovery at the country's largest field — the 300,000 b/d El Sharara — was offset by shutdowns at the 200,000 b/d Sarir field and at fields operated by state-owned NOC's Waha Oil subsidiary. Loadings from the Es Sider and Ras Lanuf ports were placed under force majeure towards the end of the month.

By Ruxandra Iordache