Opec+ production edges down in November

Opec+ crude production edged down in November as the group fell further behind its pledged production target.

Output by the 19 Opec+ members subject to quotas was 110,000 b/d lower on the month at 36.13mn b/d, according to Argus estimates. This was 790,000 b/d below the alliance's collective output target for the month, which includes the additional 'voluntary' cuts pledge made by Saudi Arabia and other members earlier in the year.

Compliance by the group's key overproducers, including Iraq, Russia and Kazakhstan, improved. They overproduced by 360,000 b/d, compared with 450,000 b/d in October. Still, this was more than cancelled out by members including Nigeria, Angola, Azerbaijan and Malaysia, which have consistently been unable to meet their production targets due to insufficient capacity.

Saudi Arabia's production held steady at 8.97mn b/d, which is 10,000 b/d shy of its production target. Russian production fell by 30,000 b/d to 9.5mn b/d, which was 50,000 b/d above its target for the month.

The lower overall production will be a relief to Opec+, which has been attempting to drive down output in a bid to "supporting the stability and balance of the oil market." Several members of the group on 30 November pledged additional cuts worth 700,000 b/d for the first quarter of next year, although the real-term production pledge equates to a reduction of 500,000 b/d compared with current targets.

Several key members of the group made a concerted effort this week to convince the market the new cuts, planned for the first quarter of 2024, will be delivered and overproducers will fully comply with their production targets.

Saudi Arabia's energy minister Prince Abdulaziz bin Salman told Bloomberg TV on 4 December that the cuts would be delivered and signalled they could be extended beyond the first quarter. Algeria's energy minister Mohamed Arkab issued a statement dated 5 December that floated the possibility of an extension as well as "additional measures if deemed necessary."

Russia and Saudi Arabia put out a joint statement following a surprise visit by Russian President Vladimir Putin to Riyadh on 7 December, which called on all members to "adhere" to the Opec+ agreement. Repeat offender Iraq put out a statement on the same day stressing its support for the latest cuts and pledged to fully comply with its target.

Front month Ice Brent crude futures are trading around $76/bl, some $7/bl below where they were before alliance announced its latest cuts at the end of November.

By Aydin Calik