The Organization of Petroleum Exporting Countries added 350,000 barrels a day last month, almost 40% more than specified in its schedule for reviving supplies shuttered during the pandemic, according to a Bloomberg survey. The boost was driven partly by a recovery in Nigeria, and also by excessive production in Iraq.
Ironically, the recovery comes just as OPEC and its allies contemplate whether to pause the next monthly supply increase as a new virus strain menaces global oil demand and plunges prices into a bear market. The 23-nation OPEC+ coalition will make a decision on January output at a meeting later on Thursday.
In recent months the cartel has faced a different issue: fulfilling its promise to restore suspended production sufficiently to soothe runaway fuel prices and aggressive inflation among its biggest customers. Its inability — or refusal — to do so prompted President Joe Biden to co-ordinate a release of emergency stockpiles by major economies in later November.
That same month, the organization got a better grip on the problem. Output among its 13 members rose by the most since July to reach 28 million barrels a day, according to the survey. The figures based on ship-tracking data, information from officials and estimates from consultants including Rystad Energy AS and JBC Energy GmbH.
Iraq made the biggest increase, boosting by 100,000 barrels a day to 4.28 million barrels a day — considerably above its agreed limit. Baghdad has long chafed against OPEC output restrictions, contending that it deserves to make up for decades of revenue losses from sanctions and conflict.
Nigeria delivered the best comeback, advancing by 90,000 barrels a day to 1.53 million a day. Royal Dutch Shell Plc announced on Nov. 27 it would be able to resume shipments of the nation’s Bonny Light crude after a month-long disruption caused by a pipeline outage.
Despite the gains, Nigeria and the organization as a whole is still cutting far more than outlined by its production accords. Its compliance with designated cuts stands at 112%, with Angola a particular weak link as it suffers from a chronic deterioration in capacity.
Given the widespread disruptions, it’s unsurprising that delegates from several straggling countries support the idea of pausing the next output boost by OPEC+. While consumers continue to urge the alliance to keep the taps open, the combination of depressed prices and capacity constraints may steer the group towards that choice later today.
The 10 members of OPEC participating in the voluntary output adjustment increased production by 330,000 barrels a day between October and November, according to the Bloomberg survey. That was more than the 254,000 barrels a day that they should have added as their share of the planned overall OPEC+ increase of 400,000 barrels a day.