According to the latest S&P Global Platts poll, OPEC and its partners added 750,000 b/d of crude production in July, somewhat less than intended, as only eight of the coalition’s 22 members increased Output last month despite weaker limits. Despite having a cumulative ceiling of 36.34 million b/d, the 19 nations with quotas under the OPEC+ deal produced 35.99 million b/d in July.
In July, OPEC’s 13 members produced 26.83 million barrels per day, up 640,000 barrels per day from June, with Saudi Arabia accounting for 80% of the rise. The group’s nine non-OPEC members, led by Russia, produced 13.38 million barrels per day in July, up 110,000 barrels per day from June. However, the group’s quota compliance plummeted to 106 percent in July, the lowest level since January.
This was due to Saudi Arabia, the OPEC kingpin, unwinding almost all of its voluntary cut, producing 9.48 million b/d, close to its July quota of 9.50 million b/d and at its highest level since April 2020. As oil demand recovers this summer, the OPEC+ alliance has added 1.72 million b/d of production in the last three months. However, demand headwinds from an increase in coronavirus infections in Asia and Africa, as well as within producer group conflicts, imply the rest of 2021 may not go as smoothly as planned.
Following a series of tense meetings in July, the alliance decided to increase Output by 400,000 barrels per day (b/d) every month beginning in August, as well as grant five nations – Saudi Arabia, Russia, the United Arab Emirates, Iraq, and Kuwait — greater Output targets beginning in May 2022. However, due to technological and operational reasons, several of the coalition’s smaller producers, including as Angola, Nigeria, Malaysia, and Algeria, have seen their production capabilities continuously decline, reducing the amount of spare capacity they have available to enhance Output.