OPEC’s crude production edged up by 50,000 b/d in August to 29.93 million b/d, the latest S&P Global Platts survey found, with the bloc still struggling to move oil prices higher despite broad overall compliance with output cuts in place since January.
Although oil prices are inching towards the $65 mark, it remains lower than budget benchmark of many countries, even as monitoring committee of OPEC and its partners in the production cut deal could discuss this week adopting new metrics to monitor the state of the global oil market and its balance, Russian news agency TASS quoted OPEC’s Secretary-General Mohammad Barkindo as saying on Monday.
“This is not on the agenda, but we can discuss it (metrics) as we will discuss the market situation,” Barkindo said, as carried by TASS.
The August figure is 930,000 b/d lower than what OPEC’s 14 members — who collectively control some one-third of global production capacity — pumped in January, and 2.34 million b/d lower on the year, not counting Qatar, which left the organization at the end of 2018.
The cuts, along with US sanctions on OPEC members Iran and Venezuela, have contributed to tightening supplies, particularly of heavier and sour crudes.
Nigeria, another member that has often pumped more than its cap, hit its highest production level since January 2015 of 1.98 million b/d, the survey found.
However, oil prices remain depressed over US-China trade tensions and global economic concerns.
The Joint Ministerial Monitoring Committee (JMMC) of the OPEC and non-OPEC countries that are part of the deal is meeting in Abu Dhabi later this week to take stock of the oil market and the OPEC+ coalition’s efforts to erase the glut and prop up prices.
At the end of last month, the JMMC said that the July 2019 overall conformity level of 159 percent was 22 percentage points higher than in June.
The JMMC meeting this week comes as oil prices continue to be lower than what many OPEC members need to balance their budgets and as various surveys pointed that the cartel raised its crude oil production in August compared to July, and lifted exports to a four-month high.
“OPEC plus cuts and geopolitical supply risks remain supportive” of prices, S&P Global Platts Analytics said in a note.
Several key OPEC members and their allies, including Russia, will gather Thursday in Abu Dhabi for a Joint Ministerial Monitoring Committee meeting, where traders will be watching closely for signals on potentially deeper cuts. OPEC, Russia and nine other oil-producing countries are in the midst of a 1.2 million b/d in production curb agreement that runs through March 2020.
With August’s rise in output, OPEC’s overall compliance fell to 103% among the 11 members with output caps from 117% in July, according to Platts calculations.
Saudi Arabia, which co-chairs the JMMC with Russia and was the driving force behind the cut agreement, boosted its output to 9.77 million b/d in August, the survey found, as tanker tracking data showed a rise in its crude exports and satellite imagery suggested a build in inventories.
Even with the rise, the kingdom remains 540,000 b/d under its agreed quota of 10.31 million b/d.
Iraq, which has regularly flouted its quota, had the biggest rise among OPEC members, pumping an all-time high of 4.88 million b/d in August — 370,000 b/d in excess of its cap of 4.51 million b/d — according to the survey.
The Saudi Press Agency on Thursday reported that Saudi Crown Prince Mohammed bin Salman and Iraqi Prime Minister Adil Abdul Mahdi spoke by phone and discussed “the importance of joint coordination to achieve oil market stability.”
Iran kept its output steady in August at 2.30 million b/d, amid negotiations with Europe over a $15-billion credit line that could facilitate oil trade and keep Iran committed to the nuclear deal.
The US stepped up its sanctions on Iran this week, but speculation is rife that Iranian President Hassan Rouhani could meet with his US counterpart, Donald Trump, at the UN General Assembly later this month.
Production in Venezuela, also affected by US sanctions, fell to 700,000 b/d in August, the survey found.
Kuwait pumped its lowest level in nearly eight years, while Libya dropped due to a force majeure declared on its El Sharara field.
The Platts OPEC figures are compiled by surveying OPEC and oil industry officials, traders and analysts, as well as reviewing proprietary shipping and inventories data.
In July, OPEC and 10 non-OPEC partners agreed to extend through March 2020 their 1.2 million b/d production cut agreement, which exempts Iran, Libya and Venezuela.