Opec+ posts small output increase in December

Opec+ production rose by 40,000 b/d in December, led by increases from Nigeria, Iran and Iraq.

But output by the 19 members adhering to production quotas fell by 10,000 b/d on the month to 36.08mn b/d, according to Argus estimates. This left the alliance 840,000 b/d below its target for the month, which includes the additional 'voluntary' cuts pledge made by Saudi Arabia and other members in the first half of 2023.

The 10 Opec members subject to quotas increased production by 60,000 b/d in December, with notable increases from Iraq and Nigeria. But this was fully cancelled out by a 70,000 b/d drop from the nine non-Opec members of the wider alliance, led by falls from Russia and Bahrain.

Opec+ production — including Iran, Libya and Venezuela that are exempt from quotas — rose by 40,000 b/d on the month to 41.32mn b/d. Sanctions-hit Iran boosted output to the highest since October 2018 at 3.25mn b/d, which is 680,000 b/d higher than it was in the first month of 2023.

For 2023 as a whole Opec+ output dropped by 820,000 b/d to 41.62mn b/d. The fall was much steeper for the 19 members adhering to production quotas, which saw their collective output fall by 1.46mn b/d to 36.75mn b/d. This difference is mostly explained by the fact that all the three of the exempt members of the alliance substantially increased their production in 2023.

The name of the game for the alliance in 2023 was driving down output in what it describes as a bid to support "the stability and balance of the oil market." A fresh set of supply cuts came into effect this month, including an additional 500,000 b/d cut from six members, an extension of Saudi Arabia's existing 1mn b/d cut and a 200,000 b/d increase to Russia's existing 300,000 b/d oil export cut. Opec+ has pledged 5.4mn b/d of collective or unilateral cuts since October 2022.

But while Saudi Arabia has made a point of adhering to its production pledges — it did so again December with output of 8.95mn b/d — it has struggled to get others such as Iraq, Gabon, Russia and Kazakhstan to toe the line.

While Russia reduced its output by 60,000 b/d to 9.44mn b/d in December — 10,000 b/d below its target — Iraq increased its output by 40,000 b/d, leaving it 110,000 b/d above its target of 4.22mn b/d. Baghdad has its work cut out if it intends to adhere to its new target of 4mn b/d for the first quarter of 2024.

Nigeria, which has persistently been unable to meet its production quotas, saw its output increase by 120,000 b/d in December — the highest since 2020. Nigeria is on the cusp of starting up the 650,000 b/d Dangote refinery, meaning its crude exports are likely to fall in the coming months. Angola, which marked its final month as an Opec member following a dispute over its new production quota, boosted production by 20,000 b/d to 1.18mn b/d.

More realistic production quotas kicked in on 1 January for the alliance's underproducers, which means the group's overall target will be more reflective of its actual capacity.

By Aydin Calik and Denise Albrighton