Opec+ production edges up

Total Opec+ crude production edged up by 60,000 b/d to 40.76mn b/d in August, as rising Iranian supply outweighed a decline in Saudi output.

Iran, which is not bound by Opec+ quotas, increased its production by 160,000 b/d to 3.2mn b/d last month, as exports rose in the face of US sanctions, Argus estimates. Further gains could be on the way. Iran's oil minister Javad Owji said production was at 3.3mn b/d in late August and could hit 3.4mn b/d by late September.

Saudi Arabia's production shed another 100,000 b/d last month as exports fell, sending output to a two-year low of 8.9mn b/d. The decline meant Riyadh overdelivered on its unilateral pledge to cut output by an additional 1mn b/d from July (see table). Saudi Arabia has now cut production by 1.35mn b/d since the start of the year. While Riyadh justifies this in the name of "supporting stability and balance in oil markets", it is notable that almost half of its cuts have been offset by Iran which has added 630,000 b/d this year.

Russia's production was largely unchanged in August at 9.47mn b/d — slightly above its 9.45mn b/d effective output target. Russia also delivered on its pledge to cut August crude exports by 500,000 b/d compared to May-June levels of 4.8mn b/d, with Argus estimating a reduction of 520,000 b/d. That said, Russia's exports were already around 570,000 b/d below this level in July, suggesting its sanctions-hit oil producers were struggling to find buyers anyway.

Saudi Arabia and Russia on 5 September announced an extension to their crude supply cuts for a further three months until the end of the year. Saudi Arabia pledged to continue its 1mn b/d unilateral crude production cut — first implemented in July and extended into August and September — until the end of December. Russia said it will keep its crude exports 300,000 b/d below May-June levels from September until until the end of the year.

The 19 Opec+ members with quotas saw their collective production decrease by 130,000 b/d in August, with the biggest drop among the Opec contingent coming from Saudi Arabia and the largest fall from non-Opec participants coming from Kazakhstan following power supply problems in the west of the country.

The 10 Opec members bound to targets recorded a drop of 50,000 b/d on the month and fell 770,000 b/d short of their collective target in August, as most of the African members of the group continued to underproduce. While Nigeria managed to boost output by 100,000 b/d, helped by the restart of its Forcados crude export terminal, this was partially offset by a 70,000 b/d fall from Angola.

Kurdish revival

Iraq posted its fourth consecutive rise in production last month, with output at 4.35mn b/d, which is 130,000 b/d above its target. The increase was underpinned by a ramp up in output from fields in the semi-autonomous Kurdistan region, despite the continued shut-in of the export pipeline which normally sends northern Iraqi crude to the Turkish port of Ceyhan. Producers in the Kurdistan region have been reviving output for discounted sales to the Kurdistan Regional Government and local trading companies.

Production in Libya, which alongside Iran and Venezuela is not bound by targets, rose by 40,000 b/d to 1.18mn b/d last month, recovering from a brief politically motivated oil field shutdown in July. Sanctions-hit Venezuela, which in July saw its output reach the highest level since December 2019, recorded a slight drop of 10,000 b/d to 800,000 b/d.

By Aydin Calik