OPEC+ Records 86% Compliance with Output Cut as Nigeria Beats Expectation

 

OPEC output cut

  • As OPEC+ calls for an extension of the current output cut of 9.7 million barrels beyond June, a new report indicates the alliance may have reached a relatively impressive degree of compliance in May.
  • Nigeria ‘s compliance for the month of May was better than expected 83 per cent after its output dropped by around 260,000 barrels a day between April and May.
  • Some of the non-OPEC Member States showed less than impressive levels of enforcement. Kazakhstan, Brunei and South Sudan respectively reported 47%, 22% and 13% compliance.

The OPEC+ alliance have reached a relatively impressive degree of compliance in May, the first month of the world’s biggest effort to curtail oil production, as the organisation calls for an extension of the current output cut of 9.7 million barrels beyond June.

Energy Intelligence reports that the alliance reached a compliance rate of 86 per cent, in May, with a production reduction of 9.7 million barrels per day agreed for both May and June. This contrasts the compliance rate of 74 per cent that a Reuters survey reported earlier.

The drastic cut in production is aimed at counteracting the severe downturn in global oil prices caused by the coronavirus pandemic and supply glut. From then on, the fall in demand has helped push prices well above April falls.

READ ALSO: Nigeria to Further Revise 2020 Budget Oil Benchmark to $20 Per Barrel

Some West African OPEC leaders, however, fell short of their promised production reductions, with Angola and Congo reporting 54% and 20% respectively compliance rates. In October 2018, Gabon’s May production actually surpassed its volumes, which was chosen as the baseline month against which the cuts are assessed.

Nigeria ‘s compliance for the month of May, however, was better than expected 83 per cent after its output dropped by around 260,000 barrels a day between April and May. However, this contrasts with the 52 percent compliance that Nigeria’s State Minister for Petroleum, Timipre Sylva, has disclosed.

Some of the non-OPEC Member States showed less than impressive levels of enforcement. Kazakhstan, Brunei and South Sudan respectively reported 47%, 22% and 13% compliance. The overall compliance rate of the OPEC+ alliance was elevated by the success of four of its top five members, close to 100%. Of those heavyweights, only Iraq lagged way behind with less than 50 per cent enforcement.

Russia failed to live up to its prior OPEC+ obligations. But after removing condensate, which is not calculated as a percentage of its current quota, its oil output in the month of May is 8.6 million barrels per day; denoting an impressive 96 percent compliance rate.

Compliance is foreseen to get better in June.

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