OPEC+members produced 2.9 million barrels per day (bpd) below their collective oil production target in July, two OPEC+ sources said on Monday.
The gap between overall quota and actual oil production from the OPEC+ members has been growing for more than a year, with many producers unable to raise production due to capacity and/or investment constraints, while the alliance has added more barrels to its monthly oil production target.
Production in Russia, albeit stabilized at a level from February, just before the invasion of Ukraine, hasn’t increased as it should have been under the OPEC+ agreement.
Russia, the leader of the non-OPEC group in the OPEC+ pact, has the same monthly targets as OPEC’s top producer and largest crude oil exporter in the world, Saudi Arabia.
But while the Saudis have been raising production in recent months, Russia has not. In addition, many OPEC+ members, especially OPEC’s African producers Nigeria and Angola, have been significantly lagging behind their respective quotas.
So, in July, per Reuters’ sources in OPEC+, the alliance was 2.892 million bpd below quota, bringing compliance with the cuts to hit a mind-blowing 546 per cent in July, up from 320 per cent in June. Compliance at 100 per cent means OPEC+ is pumping at the levels set out in the deal.
For June, the OPEC+ group already had a massive shortfall of 2.84 million bpd between actual production and the target oil output level as part of the deal, two delegates at the alliance told Argus last month.
As OPEC+ is unwinding its cuts, more and more members are falling further behind their quotas due to a lack of capacity or investment in supply.
OPEC+ was widely expected to continue to underperform by a lot compared to its production targets for July and August after the group decided to accelerate the rollback of the cuts and have those completely unwound by the end of August.