Russia, alongside Iraq and Kazakhstan have submitted their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. According to OPEC, the entire over-produced volumes will be fully compensated for over the next 15 months through September 2025, with Russia ‘paying back’ a cumulative 480 kb/d, Iraq 1,184 kb/d, and Kazakhstan 620 kb/d, international news agency reported.
It recalled that last month, OPEC+ announced that it would extend a cut of 1.65 million barrels per day, made public in April 2023, until the end of 2025. The cut was due to expire at the end of the current year the report noted. The group according to OPEC-Plus is also expected to extend a cut of 2.2 million barrels per day, announced in November 2023, until the end of September this year, after which it will be gradually phased out on a monthly basis by the end of September 2025. This in effect means that OPEC+ will continue to restrict oil supply for at least the next 18 months but gradually start adding some extra barrels back into the market later this year, according to the report.
Continuing the report noted that the production cuts would, notwithstanding, be partly offset by growth in non-OPEC production. Recalling that in April, OPEC predicted that non-OPEC supply would grow by 1 million b/d in 2024, 100,000 b/d lower than its previous forecast. It added that the group also trimmed its non-OPEC supply growth in 2025 by 100,000 b/d to 1.3 million b/d. As OPEC maintained that the bulk of this growth was expected to come from the US, Brazil, Canada, Russia, Kazakhstan and Norway. U.S. Energy Information Administration (EIA) was also reported to have disclosed that the U.S. crude oil production would rise to 13.19 million barrels per day (bpd) this year, and by another 460,000 bpd to hit 13.65 bpd in 2025, while OPEC predicted a rise in global oil demand by 2.2 million b/d in 2024, and by 1.8 million b/d in 2025.
Against the earlier speculation of discord from the reported overproduction of some OPEC+ members – most notably Iraq, Kazakhstan, and Russia, the Russian Deputy Prime Minister Alexander Novak was reported to have debunked any incidence of misunderstanding.
He was quoted to have said: “We don’t have any friction, as you put it,” Novak was reported to have told reporters in Moscow.
“We have a common goal to ensure a balanced market and compliance with the agreements,” Novak was quoted to have said, adding that Russia is in constant contact with the ministers of the other OPEC+ producers.
“I spoke with the ministers just last week,” Russia’s top oil policy official were quoted to have said.
OPEC Secretariat was equally reported to have acknowledged receipt of compensation plans from Iraq, Kazakhstan, and Russia for their overproduced volumes for January to June 2024.
“The cumulative overproduction in these six months was about 1.184 million barrels per day (bpd) for Iraq, 620,000 bpd for Kazakhstan, and 480,000 bpd for Russia”, report quotes OPEC as saying.
“Russia exceeded production volumes in June, but output has declined in each month since April, per estimates from independent sources approved by the agreement”, report also quotes the ministry.