Opec-Plus Compliance Hits Record High in March

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Saudi Arabia and Iraq led Opec-plus to a 113% compliance rate with the alliance's production cuts in March, according to Energy Intelligence's assessment. That's the highest level since the agreement to rein in output took effect last May. However, the nine non-Opec members who are part of the pact failed to meet their obligations and together mustered only 90% compliance for the month, the lowest rate in 10 months. Opec-plus is entering a tricky phase starting in May as it prepares to step up production gradually to meet an uptick in oil demand (IOD Apr.1'21). But finding a balance between pumping new oil, reducing inventories and rolling back Saudi Arabia's additional voluntary cut of 1 million b/d in February-April will be challenging, to put it mildly. Iraq Plans Catch-Up Cuts The Saudis withheld 2.86 million b/d of production in March -- made up of 1.88 million b/d from the original deal and 979,000 b/d as part of the voluntary cut announced in early January (IOD Jan.5'21). As a result, Saudi compliance was a stellar 152%. The other standout performer was Iraq, the second-largest producer in Opec and the third-largest producer in the Opec-plus alliance after Saudi Arabia and Russia. After four months of overproduction, Iraq managed to boost its compliance to 106% in March, according to Energy Intelligence's assessment. The reduction mainly came from southern Iraq -- reflected in an 85,000 b/d drop in Basrah crude exports -- and appears to be part of a concerted effort by Baghdad to compensate for past overproduction. An internal Opec document seen by Energy Intelligence indicates that Iraq submitted a compensation plan in mid-March that entails slashing its output by 100,000 b/d in February-July. Nigeria Falls Into Line Nigeria also performed well since it only produced 1.428 million b/d in March, about 130,000 b/d below its ceiling. Once a perennial laggard in Opec, Nigeria has fallen into line more recently (IOD Apr.8'21). In general, March was a spectacular month for Opec cohesion, with the eight largest producers meeting or exceeding their output target (see table). As a result, Opec's overall compliance was a record 126%. Results were less rosy for the non-Opec subgroup. Russia, which had attained compliance for once in February, ratcheted up its output by 159,000 b/d month on month and overproduced by 80,000 b/d. Neighboring Kazakhstan, meanwhile, saw its daily production fall compared to February, but the Central Asian country still only managed a 70% compliance rate. Insiders say that Kazakhstan's decision to ramp up exports in February became a bone of contention among Opec-plus leaders during last week's meeting. Unlike Iraq, neither Russia nor Kazakhstan -- both non-Opec countries -- have submitted compensation plans although the two countries have been regular violators of the agreement. However, Russian compliance has generally been around 95% and that seems to be good enough for Saudi Arabia -- Opec's de facto leader. All Eyes on Iran and Libya Looking ahead, Saudi Arabia is likely to be more concerned about Iran and Libya, two Opec members who don't have quotas in the current deal but have considerable spare capacity that could be tapped as demand continues to recover from last year's Covid-19 crash. Iran produced 2.45 million b/d in March, according to Energy Intelligence’s assessment, which is 200,000 b/d more than February. Iran still has about 1.5 million b/d of spare capacity, but analysts do not expect a quick ramp-up as long as US sanctions remain in place, given that most potential importers are reluctant to irk Washington. Libya's March output was estimated at 1.2 million b/d, but there are indications that this will reach 1.3 million b/d in April. Gary Peach, New York March 2021 Opec and Non-Opec Compliance Opec Base Target Mar Compliance Saudi Arabia 11,000 1,881 8,140 2,860 152% Iraq 4,653 796 3,811 842 106 UAE 3,168 542 2,608 560 103 Kuwait 2,809 480 2,327 482 100 Nigeria 1,829 313 1,356 473 151 Angola 1,528 261 1,223 305 117 Algeria 1,057 181 875 182 101 Congo (Br.) 325 56 253 72 129 Gabon 187 32 238 -51 -159 Eq. Guinea 127 22 109 18 82 Opec 10 26,683 4,564 20,940 5,743 126 Iran 3,296 0 2,450 0 NA Venezuela 1,171 0 565 0 NA Libya 1,114 0 1,200 0 NA Opec 13 32,264 25,156 5,743 126 Non-Opec Base Target Mar Compliance Russia 11,000 1,751 9,329 1,671 95 Mexico 1,753 0 1,641 0 NA Kazakhstan 1,709 272 1,529 180 66 Oman 883 151 778 105 70 Azerbaijan 718 123 592 126 102 Malaysia 595 102 470 125 123 Bahrain 205 35 173 32 91 South Sudan 130 22 133 -3 NA Brunei 102 17 94 8 47 Sudan 75 13 84 -9 NA Non-Opec 10 17,170 2,486 14,823 2,235 90 Combined 20 43,853 7,050 35,764 7,977 113% In '000 b/d. Opec and non-Opec compliance based on crude

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