Kazakhstan plans to submit its revised plan to compensate for producing above its OPEC+ crude quota in 2024 in the coming days, the energy ministry said in a statement posted on Instagram June 12.
Sluggish oil prices continue to put pressure on the group’s overproducers, which also include Iraq and Russia. The three countries have a deadline of the end of June to submit compensation plans to the OPEC secretariat.
Iraq’s Energy Ministry said June 12 that it remains committed to the agreement and will compensate for 2024 overproduction by the end of September 2025. Kazakhstan has given the same timeframe.
The ministry will adhere to the required production level stipulated in the agreement, which is set at 4 million b/d for the month of June and the subsequent months,” Iraq’s energy ministry said.
Iraq produced 4.195 million b/d, compared with a quota of 4 million b/d, and Russia produced 9.182 million b/d, compared with a quota of 9.049 million b/d in May, according to secondary sources, OPEC said June 11.
Kazakhstan’s output was 1.511 million b/d in May compared with a quota of 1.468 million b/d.
“Kazakhstan will compensate for this overproduction and fully meet its commitments in June, including additional voluntary reductions,” the energy ministry said.
It added that Kazakhstan remains fully committed to the OPEC+ agreement.
The three producers are taking part in a combined 2.2 million b/d of voluntary cuts, which the group agreed to extend through the third quarter at a meeting June 2.
Price pressure
Overproducers have come under significant pressure to compensate for exceeding quotas in recent months, as the price response to their cut announcements has been muted.
Platts, part of S&P Global Commodity Insights, assessed Dated Brent at $80.74/b on June 11, down from a 2024 peak of more than $93/b in early April.
Current prices are well below estimated fiscal breakeven oil prices for most of the group’s biggest producers.
Despite weak prices, from October OPEC+ producers plan to gradually ease voluntary output cuts, subject to market conditions.
The compensation volumes will offset a significant proportion of the planned increases in the fourth quarter, according to analysis prepared by the group and seen by S&P Global Commodity Insights.
If the compensation cuts are made over 15 months from July 2024 to September 2025, that should result in about 100,000 b/d of extra cuts by Iraq, Kazakhstan and Russia to offset the tapering of the voluntary cuts, the OPEC+ analysis shows.
If the compensation is implemented over 12 months from October 2024 to September 2025, that is 123,000 b/d in extra cuts over that span, while compensation made over nine months from January to September 2025 comes out to 166,000 b/d in reductions.
These estimates may be revised following submission of the new compensation plans.
OPEC+ also agreed June 2 to extend a further 3.6 million b/d of group-wide cuts until the end of 2025.
Despite sticking to its policy of keeping significant volumes off the market, OPEC continues to release optimistic demand forecasts.
OPEC expects global oil demand growth of 2.25 million b/d in 2024 and 1.85 million b/d in 2025, it said June 11 In its closely watched monthly oil market report.
It has kept its 2024 global oil demand forecast steady at above 2.25 million b/d ever since it began forecasting for the year in July 2023.
Source: PlattsSelect Language