January 10, 2023


Opec-Plus: December Output Notches Slight Gain

  • Crude oil production by all 23 Opec-plus members posted a 100,000 b/d increase in December to reach 44.3 million b/d.
  • Output by the 19 members with a quota rose by 63,000 b/d, leaving a 2 million b/d gap between actual production and the targeted level for the month.
  • Opec-plus’ crude production averaged 44 million b/d over full 2022, a 2.6 million b/d increase from 2021.

The 13 core Opec producers lifted output by 87,000 b/d in December compared to November to 28.84 million b/d, according to Energy Intelligence’s assessment.

Within Opec, the 10 countries with a quota increased output by 57,000 b/d to 24.36 million b/d. The nine non-Opec producers that are part of the production agreement managed a mere 6,000 b/d uptick to 13.75 million b/d.

The 38.1 million b/d produced by the 19 countries with a quota was 2 million b/d short of the alliance’s collective target — roughly the same size shortfall posted in November (see graph).

The group had pledged to cut 2 million b/d in supply from November. However, in the two months since the agreement took effect, the actual reduction has been only 320,000 b/d, according to Energy Intelligence's assessment. The rest of the reductions have largely been on paper, since the agreement essentially slashed unrealistic targets for countries like Nigeria and Iraq that had already reached capacity.

Annually, crude production by the alliance — including non-quota members Iran, Mexico, Libya and Venezuela — rose by 6.3% in 2022 compared to 2021, to 44 million b/d.

Created with Highcharts 9.0.0('000 bbl)OPEC-PLUS SHORTFALL HOLDS STEADY IN DECEMBERSep'21Oct'21Nov'21Dec'21Jan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'22Oct'22Nov'22Dec'2201,0002,0003,0004,000Source: Energy Intelligence

West African Surprise

African producers Nigeria and Angola illustrate the issues around the latest Opec-plus cut. After the group began unwinding its 2020 landmark cut agreement, these two countries proved to be the alliance’s biggest laggards due to underinvestment and, in Nigeria’s case, theft. Together the two countries had a shortfall of 835,000 b/d in December, or 80% of Opec’s total deficit for the month.

Yet in December, the two countries pulled off a decent upswing. According to Energy Intelligence estimates, Angola raised output by 60,000 b/d to nearly 1.2 million b/d, while Nigeria increased production by nearly 130,000 b/d to 1.17 million b/d. Whether the two troubled producers can sustain this turnaround, or improve on it, is unclear, however.

The additional 190,000 b/d from these two countries was largely offset by a significant decline in Kuwaiti barrels, which provided December’s second surprise. Output by the Middle East producer amounted to 2.55 million b/d, down 130,000 b/d, according to Energy Intelligence estimates. Exports dipped 300,000 b/d last month, shipping data show, and refining capacity is believed to be maxed out.

Alliance leader Saudi Arabia kept its output largely flat at 10.47 million b/d, while Iraq, which has struggled to meet its targets, boosted production by a marginal 17,000 b/d as its Basrah export infrastructure creaked under the strain.

Russia Starts to Dip

In December, Russia entered a new phase of EU import embargoes. Opec-plus’ second-largest producer still managed to prop up crude oil production last month, keeping the decline at less than 40,000 b/d, to just under 9.8 million b/d.

Still, the result represented a 680,000 b/d shortfall from Russia’s official target, the largest among all Opec-plus producers, or one-third of the entire alliance's shortfall.

This production gap is expected to widen as Russia faces increased challenges in 2023 from the EU embargo, which in January should include a steep drop in Druzhba pipeline shipments now that Germany and Poland have apparently ceased offtakes.

Kazakhstan’s output dipped by a minor 10,000 b/d to 1.67 million b/d, supported by sustained output at the 400,000 b/d offshore Kashagan field.
Created with Highcharts 9.0.0($/bbl)OPEC BASKET: 2022 PRICE GAINS WIPED OUTApr '21Jul '21Oct '21Jan '22Apr '22Jul '22Oct '22Jan '23$60$70$80$90$100$110$120$130Source: Opec

Year of Reckoning

At 44 million b/d, Opec-plus’ output reached a three-year high in 2022. However, this level was still 1.5 million b/d less than in pre-pandemic 2019.

This year, the alliance will face pressures from an expected decline in Russian production, mounting global economic troubles and anticipated strong growth of non-Opec-plus supply. The group is expected to try to keep a lid on output increases as a result.

The softness in the Opec Basket price in recent months will serve as an additional argument for staying the course (see graph).

Energy Intelligence assesses current Opec-plus spare capacity — measured as wellhead production that can start within 30 days and be sustained for 90 days — at 3.2 million b/d. This is forecast to expand to 3.7 million b/d by year’s end, assuming the alliance does not significantly increase output.

Overall, Energy Intelligence forecasts that Opec-plus’ crude production will decline this year by 900,000 b/d to 43.04 million b/d, which represents the estimated decline in Russian crude output for the period.

December 2022 Opec-Plus Compliance
OpecBaseTargeted OutputVoluntary CutDec ProductionNov ProductionDec CutCompliance Rate
Saudi Arabia11,50010,47852610,473 10,471 1,029 196%
Iraq4,8034,4312204,389 4,372 431 196
UAE3,5003,0191603,041 3,047 453 283
Kuwait2,9592,6761352,548 2,676 283 210
Nigeria1,8291,742841,168 1,036 793 944
Angola1,5281,455701,194 1,133 395 564
Algeria1,0571,007481,019 1,029 28 58
Congo (Br.)32531015249 261 64 427
Gabon1871779195 190 -3 NA
Eq. Guinea127121685 88 39 650
Opec 1027,81525,4161,27324,361 24,304 3,454 271
Iran3,296002,610 2,595 NANA
Venezuela1,17100660 640 NANA
Libya1,114001,205 1,210 NANA
Opec 1333,39625,4161,27328,836 28,7493,454271
Non-OpecBaseTargeted OutputVoluntary CutDec ProductionNov ProductionDec CutCompliance Rate
Russia11,50010,4785269,795 9,833 1,667 317
Kazakhstan1,7091,628781,669 1,678 31 40
Oman88384140861 846 37 93
Azerbaijan71868433563 551 167 506
Malaysia59556727374 410 185 685
Bahrain2051969197 196 9 100
South Sudan1301246135 81 49 817
Brunei10297583 76 26 520
Sudan7572370 72 3 100
Non-Opec 915,91714,68772713,74913,7432,168 298
Mexico1,7531,75301,714 1,706 NANA
Non-Opec 1017,67016,44072715,463 15,449----
Combined 1943,73240,1032,00038,110 38,0475,622 281%
Opec 2351,06641,856--44,299 44,198 ----

Gary Peach, New York