OPEC+ in August failed to fully increase oil production under the deal

MOSCOW, 14 Sep — PRIME. The International Energy Agency (IEA) believes that the OPEC + alliance in August could not fully ensure the growth in oil production required under the deal, produced 3.4 million barrels per day less, the agency said in a September report.

“OPEC+ oil supply rose by 510,000 bpd in August, thanks to a sharp recovery in Libyan production and an increase in production from Middle Eastern producers, as the alliance completely reversed record cuts imposed during the 2020 pandemic. Production amounted to 44.67 million bpd , which was the highest since the block completely shut down production in April 2020 during a short-lived battle for market share,” the IEA said in a filing.

“In August, production in OPEC countries increased by 680 thousand barrels per day, to 29.72 million barrels per day, while production from non-OPEC partners decreased by 170 thousand barrels per day, to 14.95 This resulted in the group’s supply being 3.4 million bpd below the official target as production problems, maintenance, capacity constraints and sanctions on Russia limited supply,” the report added.

The IEA believes that the increase in combined OPEC+ production has reduced the alliance’s effective spare capacity to just over 3 million barrels per day, most of which comes from Saudi Arabia and the UAE. In August, Saudi Arabia’s oil production approached 11 million bpd, leaving it with 1.3 million bpd in reserve. The UAE had about 700,000 barrels per day of idle capacity in the last summer month.

OPEC+ cut oil production by 9.7 million barrels per day in May 2020 due to a drop in oil demand caused by the coronavirus pandemic. Then the terms of the agreement were repeatedly adjusted, and in August the alliance moved to the final stage of exiting its cuts. Under the terms for September, OPEC+ increases production by 100 thousand barrels per day, but in October it reduces by the same volume and returns to August parameters.

At the same time, a number of OPEC+ countries, due to a natural decline in production, technical issues or external restrictions, cannot increase production to the level allowed to them. Difficulties, in particular, arose in Nigeria, Equatorial Guinea, Congo, Angola.