Opec+ production fell short in August

Opec+ producers subject to quotas raised their output by only 30,000 b/d in August and undershot their combined target by a massive 3.4mn b/d.

The coalition was due last month to have fully unwound the production cuts of 9.7mn b/d it agreed in April 2020 in response to the Covid-19 pandemic, but many members have struggled to restore supply. Years of underinvestment combined with the effects of sanctions against Russia and disruption and sabotage elsewhere have left a number of countries producing well below target.

The shortfall of 3.4mn b/d in August relative to the quota was wider by more than 600,000 b/d on the month, Argus estimates (see table).

Opec member countries with quotas raised supply by only 200,000 b/d, leaving them 1.27mn b/d below their target. Non-Opec members of the coalition underperformed to a greater extent, as output fell in Russia and Kazakhstan.

Among Opec producers, west African countries were responsible for most of the shortfall. Disruption continues to affect loadings of Forcados, Bonny Light and Brass River in Nigeria. Abuja had sought to implement security measures and meet its quota by the end of August, but came up 700,000 b/d short. A lack of investment and declining output at mature fields has put a cap on Angolan production.

The decline in west African supply was more than offset by a sharp rebound from Libya, which brought back online fields and terminals following a period of sustained disruption. Libya, which is exempt from targets, raised its output above 1mn b/d for the first time since March, leaving it 450,000 b/d higher on the month. This helped push total Opec output to its highest in over two years at 29.77mn b/d, up by 670,000 b/d on July.

Mideast Gulf producers contributed to the increase. Saudi Arabia's production edged closer to 11mn b/d, a level it has exceeded only twice since 2002 according to the Joint Organisation Data Initiative (Jodi) data.

Among non-Opec producers, Russian production fell by 50,000 b/d on the month, which pushed it 1.26mn b/d below target against a backdrop of western efforts to limit Moscow's oil revenues through sanctions. Kazakhstan's output fell as the Tengiz field underwent planned maintenance in August and the Kashagan complex halted operations for around a week from 3 August because of a gas leak. Loadings at the CPC export terminal were reduced at the end of the month because of damage to two single point moorings at the terminal.

Opec+ producers earlier this month agreed to cut their October crude production by 100,000 b/d, reversing a 100,000 b/d increase for September. The decision to cut output is unlikely to substantially affect physical supplies given how far below target levels many countries are producing.

By Denise Albrighton