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OPEC production falls by 850,000 b/d, Saudi pumps 10.46 million b/d
Non-OPEC boosts output by 150,000 b/d led by Kazakhstan, Russia
Quota shortfall narrows to 1.89 million b/d from 3.27 million b/d in Oct
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The OPEC+ oil producer alliance shrank crude output by 700,000 b/d in November, the steepest monthly decrease since April when Russian production plunged due to sanctions, the latest Platts survey by S&P Global Commodity Insights showed.
OPEC’s 13 countries produced 28.87 million b/d, a fall of 850,000 b/d from October, while Russia and eight other allies pumped 13.70 million b/d, up 150,000 b/d.
The overall decrease came as the alliance began implementing its 2 million b/d cut to quotas to counter economic headwinds. But with many members, including Russia, vastly underperforming their targets already, the actual physical cuts were always likely to be far less.
The gap between the group’s quotas and actual production remained fairly wide at 1.89 million b/d in November, the survey showed. But this is a huge improvement compared with October, when the shortfall reached 3.273 million b/d.
Iran, Libya and Venezuela are exempt from quotas under the OPEC+ agreement.
In total, only 14 of the 22 countries in the coalition actually reduced production last month, the survey found.
Gulf producers Saudi Arabia, the UAE, Kuwait and Iraq led the way, with all of them carrying out hefty cuts, as demand concerns have led to a very bearish sentiment in the oil markets.
These four producers cut a cumulative total of 780,000 b/d last month, accounting for almost all of the group’s supply reduction.
Saudi Arabia cut output by a weighty 440,000 b/d, averaging 10.46 million b/d last month, its lowest since May. The kingdom significantly reduced exports and also drew steadily from its crude inventories, survey panelists said.
Saudi energy minister Prince Abdulaziz bin Salman has reiterated that the group of major oil producers is focused on maintaining current quotas through end-2023 but remains ready to intervene if needed.
The UAE also saw a sharp fall in its exports, with production slumping 130,000 b/d last month, while Kuwait trimmed output by 120,000 b/d, the survey found.
Iraqi crude output fell 90,000 b/d to 4.49 million b/d in November as exports from the federal region and also from the semiautonomous Kurdistan region dipped. OPEC’s second-largest producer also drew from its crude inventories, survey panelists said.
Some of the cuts were offset by gains in Kazakhstan, Nigeria and Russia.
Russian crude output continued to recover ahead of the EU’s embargo and the G7 price cap, both of which went into force Dec. 5. The sanctions-hit producer pumped 9.87 million b/d in November, its highest since March 2022, as output from Sakhalin-1 field rebounded.
Russia’s seaborne crude exports were little changed in November but flows to India surged to a record high, absorbing barrels displaced from Europe where imports sank to all-time lows.
Russian oil supply disruptions are seen hitting 1 million b/d between November and March due to the impact of the EU sanctions and price caps, according to analysts with S&P Global Commodity Insights.
Fellow non-OPEC member Kazakhstan posted the biggest increase in the month, with output recovering by 180,000 b/d to 1.58 million b/d, according to the survey.
This is the highest Kazakhstan has produced since February this year. The country’s two largest oil fields –Tengiz and Kashagan — are now both online after months of maintenance and operational issues.
Meanwhile, Nigerian output rose to a four-month high of 1.17 million b/d from the return of key grades Forcados and Brass River.
The country’s petroleum minister, Timipre Sylva, recently said the oil sector was finally beginning to see some confidence, as producers were again injecting oil into the pipelines after months of sabotage and security concerns.
For December, the alliance has kept quotas steady, as it assesses the fallout from the EU’s sanctions banning seaborne Russian crude imports and the G7’s price cap denying western insurance to cargoes sold above $60/b.
China’s tentative easing of lockdown restrictions could also provide a boost for the country’s oil consumption.
Crude prices have remained volatile, with front-month ICE Brent futures falling below $80/b, while the physical crude market has weakened sharply amid a glut of sweet crudes, with demand concerns persisting. Platts assessed Dated Brent close to a one-year low of $78.56/b on Dec. 7.
“The [OPEC+] cut from October will now begin weighing on physical markets,” S&P Global analysts said in a Dec. 6 note. “While holding off on more cuts gives OPEC+ time to gauge the direction of Chinese demand, it will also grant visibility on the extent of any potential Russian dislocations, which would effectively amount to involuntary cuts.”
The Platts survey figures measure wellhead production, and are compiled using information from oil industry officials, traders, and analysts, as well as reviewing proprietary shipping, satellite, and inventory data.
Source: Platts OPEC+ survey by S&P Global Commodity Insights
Click here to read the previous survey: OPEC+ boosts output by 220,000 b/d as some members recoup recent losses: Platts survey
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