New Delhi: The latest survey conducted by S&P Global Commodity Insights reveals a notable drop in Organisation of the Petroleum Exporting Countries (OPEC+) crude oil production, marking the steepest decrease in six months.
However, the decline fell short of the approximately 700,000 barrels per day (b/d) in cuts pledged by the group for the first quarter of 2024.
In January, OPEC+ crude output witnessed a decline of 340,000 b/d, attributed partly to voluntary cuts implemented by some members and disruptions in Libya's largest oil field due to protests.
Despite this significant reduction, several members, including Iraq, Kazakhstan, the UAE, and Kuwait, failed to meet their agreed-upon targets.
The core group of OPEC countries contributed the most to the production decline, with their output slipping by 310,000 b/d. OPEC members collectively produced 26.49 million b/d of crude, down from 26.80 million b/d in December.
Meanwhile, 10 Russia-led allies, constituting OPEC+, saw a modest decrease of 30,000 b/d month-on-month, totaling 14.72 million b/d in January.
The drop in production was primarily driven by slight declines in Omani and Russian output.
Several factors contributed to the production decline, including protests leading to the shutdown of Libya's Sharara oil field, as well as voluntary cuts by Kuwait and Iraq.
Despite agreeing to significant output reductions at the last OPEC+ meeting, both countries exceeded their quotas in January.
Additionally, Nigeria and Algeria witnessed slight declines in production, with Algeria successfully completing its voluntary reductions agreed upon last year.
Notably, the UAE registered an increase in production following a long-awaited baseline increase granted under the OPEC+ deal in November.
While Saudi Arabia maintained its commitment to a voluntary 1 million b/d cut since July, holding its crude output just below the target, other members struggled to adhere to their quotas.
The failure to meet targeted reductions underscores challenges in achieving consensus and compliance within the coalition.
The shortfall in January's production cuts may impact OPEC+'s market share, especially amidst surging crude output from non-OPEC countries like the US, Canada, Guyana, and Brazil.
Despite facing market uncertainties and geopolitical tensions, OPEC+ remains committed to stabilising the market and improving the outlook for crude prices.
As the alliance prepares for its next meeting in June, compliance with agreed-upon cuts is expected to remain a contentious issue.
Despite calls for deeper cuts, internal discrepancies and production fluctuations among member states continue to pose challenges to OPEC+'s market stabilisation efforts.
The Platts survey, compiled using information from industry officials, traders, and analysts, provides insights into the state of crude oil production within the OPEC+ coalition, shedding light on compliance levels and market dynamics.