Rystad Energy's oil market update: OPEC+ compliance almost perfect in June

OPEC+ production numbers for June show that the group’s production was only marginally above its target by just 53,000 barrels per day (bpd) – its lowest level since the start of the year, according to Rystad Energy.

“The recent improvement in compliance levels with the OPEC+ cuts show strong commitment and cohesion inside the group. It also shows that the compensation mechanism put into place is working. I expect to see strong compliance continuing in the coming months,” Jorge León, Senior Vice President Oil Market Research at Rystad Energy, said.

As highlighted in Rystad Energy’s recent update, production numbers for April 2024 showed that undercompliance with production cuts by the OPEC+ group hit its highest-level last month since April 2021 (399,000 bpd).

Since then, Rystad Energy data shows a rapidly improving compliance.

In May, the group overproduced by 176,000 bpd, while in June, overproduction was just 53,000 bpd.

Production in June averaged 33.903 million bpd, while the target was 33.85 million bpd.

Importantly, the increased overall compliance is on the back of the fact that compliance among the eight voluntary cutters – Oman, Kuwait, the UAE, Algeria, Saudi Arabia, Russia, Iraq and Kazakhstan – has improved.

The rest of the OPEC+ countries –Sudan, South Sudan, Nigeria, Gabon, Equatorial Guinea, Congo-Brazzaville, Bahrain, Azerbaijan, Brunei and Malaysia—continue to over comply with these official cuts.

In April this year, the voluntary cutter production exceeded their target by a jaw-dropping 798,000 bpd.

Since then, undercompliance has improved and excess production decreased to 709,000 bpd in May and to 444,000 bpd in June.

The increase in compliance since April comes from lower overproduction in Kazakhstan (151,000 bpd in April down to 80,000 bpd in June), Iraq (310,000 bpd in April down to 236,000 bpd in June), Russia (253,000 bpd in April down to 176,000 bpd in June) and Saudi Arabia (82,000 bpd in April down to 6,000 bpd in June).

Additionally, Rystad Energy reports that the UAE underproduced in June by 55,000 bpd.

Overall, the voluntary cutters produced 30.859 million bpd in June, while their target was 30.415 million bpd.

For the group of non-voluntary cutters, production increased in June to 3.044 million bpd, which is 142,000 bpd higher than in May, mainly due to output recovery in Nigeria and Brunei.

Overall, production from these 10 countries was 391,000 bpd lower than their target for June (3.435 million bpd).

Undercompliance is mainly due to Nigerian output falling short of its target (210,000 bpd in June).

Tension between Sudan and South Sudan has also impacted their production – June output in South Sudan was only 48,000 bpd, which is 76,000 bpd lower than its target, while Sudan produced only 31,000 bpd, 33,000 bpd below its quota.

Figures for June show that OPEC+ production (including all 22 countries) dropped by 140,000 to 40.911 million bpd.

The decline was mainly due to lower output in Russia (173,000 bpd) and the UAE (76,000 bpd), despite increases from Brunei (45,000 bpd) and Nigeria (39,000 bpd).

Output from the OPEC+ countries with quota (excluding Mexico) was 33.903 million bpd, which is 195,000 bpd lower than last month.