In March, production cuts were overfulfilled by 15%, as follows from yesterday’s OPEC press release. “This is a very high level, probably the highest one in the entire period of this agreement,” Deputy Prime Minister Alexander Novak said in an interview with the Russia-24 TV channel.
By the end of July, OPEC+ will reduce its commitments to cut production to 5.8 million bpd. According to the initial plan of the deal, such quotas were to be in effect since January 2021, but they will be set with a six-month delay. Such a caution maybe linked to rises in output by producers outside the alliance. In February 2020, Libya produced 147,000 bpd, but this figure rose to 1.2 million bpd in December, thanks to an end to blockages at two major ports (Ras Lanuf and Es Sider). Arise in production was also recorded in Norway (from 1.75 million bpd in 2019 to 2.01 million bpd in 2020, according to the U.S. Department of Energy) – where a new oil field, Johan Sverdrup, one of the biggest in the North Sea, was brought into service.
In 2021, oil markets began to show more and more active signs of recovery, prompting the International Energy Agency (IEA) to raise its end-of-year forecast for demand twice – in March (from 5.4 million bpd to 5.5 million bpd) and in April (from 5.5 million bpd to 5.7 million bpd). This not only prompted OPEC+ to ease the production cut quotas significantly, but also stimulated oil output among non-members of the alliance. “Non-OPEC supply suffered from the unprecedented events and is estimated to have declined by around 2.5 mb/d in 2020, while it is forecast to grow by around 1 mb/d in 2021,” OPEC Secretary General Mohammad Sanusi Barkindo said on the cartel’s website.
Whether this will push OPEC+ to further reduce quotas, it may become known on June 1: on this day, the OPEC+ monitoring committee plans to discuss quotas for August and the remaining months of 2021, Alexander Novak said in the aforementioned interview to the Russia-24 TV channel.