OPEC Compliance Declines

OPEC Compliance DeclinesOPEC Compliance Declines

OPEC's compliance with its production quotas fell sharply in June, as output gains in the month by Saudi Arabia and Nigeria, along with Iraq's, continued to flout their cap and shrank the bloc's margin for remaining within the bounds of their supply cut agreements.
The 11 members covered by quotas remain overcompliant with their committed cuts, but only by 40,000 bpd, for a conformity rate of 104%, an S&P Global Platts survey of industry officials, analysts and shipping data found. That is down from May's rate of 117%.
The producer group pumped 30.09 million bpd, steady from May, the survey found, although much of the month's decline came from exempt Iran and Libya, and were offset by the Saudi and Nigerian surges, leading to the lower compliance rate.
OPEC and 10 non-OPEC allies, led by Russia, last week extended their 1.2 million bpd production cut agreement through March 2020, as they aim to prop up oil prices and touted their impressive compliance as evidence of their firm resolve to rebalance the market. 
With US sanctions likely to shut in more production from OPEC members Iran and Venezuela, which is also exempt from the deal, the remaining members will have less room to raise output to make up for any losses and stay under their collective ceiling.
Saudi Arabia saw its production jump by 150,000 bpd in June to 9.85 million bpd, assisted by sharp growth in crude exports, along with a rise in direct crude burn amid soaring summer temperatures, the survey found.
This is the kingdom's highest output since March, but it remains 460,000 bpd below its quota of 10.31 million bpd. 
Saudi Oil Minister Khalid al-Falih assured the market at last week's OPEC meeting in Vienna, Austria, that the kingdom will keep its production below 10 million bpd in July.


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