OPEC’s Allies Race Ahead on Output Cuts

By Brian WingfieldBrian Wingfield, Samuel DodgeSamuel Dodge and Cedric SamCedric Sam

For most of the year, OPEC nations working to eliminate an oil supply glut have been far better than their allies outside the group in complying with pledged output cuts. That changed in August, the eighth month of curbs. Non-member producers led by Russia for the first time reduced output by more than pledged, while OPEC failed to live up to its end of the deal.

OPEC Cuts Don’t Meet Target, Allies Do

Thousands of barrels a day
Cutback reached target
Cutback did not reach target
OPEC nations
*Target: 1,176
1,164
Aug.94%
1,104
July85%
998
June82%
969
May109%
1,269
April104%
1,216
March109%
1,264
Feb.97%
1,125
Jan.99%
1,153
Non-OPEC nations
*Target: 546
558
Aug.119%
648
July69%
379
June71%
389
May79%
441
April80%
444
March62%
346
Feb.31%
174
Jan.54%
301
Sources: OPEC secondary source estimates; Bloomberg, IEA preliminary estimates for non-OPEC nations. Includes revised data. Targets are based on when the deal was struck in late 2016. *Moves Equatorial Guinea’s output cuts to OPEC in line with the nation’s membership in the producer group. OPEC hasn’t officially said how it’s accounting for Equatorial Guinea.

The 21 nations participating in supply cuts are collectively trying to reduce output by almost 1.8 million barrels a day, in most cases using October levels as the starting point. Iran is allowed to boost production slightly, while OPEC members Libya and Nigeria are exempt. Russia is responsible for more than half of the non-OPEC restrictions.

Which Countries Achieved Their Output Cut Target in August?

Twelve of 21 countries involved reached their target

Cutback reached target

Cutback did not reach target

Non-OPEC nation

Russia

Kazakhstan

Azerbaijan

Iraq

Kuwait

Bahrain

Algeria

Saudi

Arabia

Qatar

U.A.E.

Mexico

Sudan

Oman

Brunei

Venezuela

South

Sudan

Ecuador

Equatorial Guinea

Malaysia

Gabon

Angola

Cutback reached target

Cutback did not reach target

Non-OPEC nation

South America

Mexico

Venezuela

Ecuador

EMEA

Russia

Kazakhstan

Azerbaijan

Kuwait

Iraq

Bahrain

Algeria

Qatar

Saudi

Arabia

U.A.E.

Sudan

Oman

Equatorial

Guinea

South Sudan

Gabon

Angola

Asia

Russia

Kazakhstan

Brunei

Malaysia

Cutback reached target

Cutback did not reach target

Non-OPEC nation

Russia

Kazakhstan

Azerbaijan

Iraq

Kuwait

Bahrain

Algeria

Saudi

Arabia

Qatar

U.A.E.

Brunei

Sudan

Oman

Venezuela

Mexico

Equatorial Guinea

South

Sudan

Ecuador

Malaysia

Gabon

Angola

Cutback reached target

Cutback did not reach target

Non-OPEC nation

Russia

Kazakhstan

Azerbaijan

Iraq

Kuwait

Bahrain

Algeria

Saudi

Arabia

Qatar

U.A.E.

Brunei

Sudan

Oman

Venezuela

Mexico

Equatorial Guinea

South

Sudan

Ecuador

Malaysia

Gabon

Angola

Note: OPEC members Iran, Libya and Nigeria are allowed to boost output

The 10 non-OPEC producers participating in output cuts last month achieved 119 percent compliance with their, versus 69 percent in July, according to Bloomberg calculations from International Energy Agency data on crude production. The agency said the improvement was partially due to oil-field maintenance in nations including Russia and Kazakhstan, with the latter nation complying with pledged reductions for the first time.

August Crude Oil Production

Thousands of barrels a day
Cutback reached target
Cutback did not reach target
Non-OPEC nation
  • 10,910
    Russia
  • 10,022
    Saudi Arabia
  • 4,448
    Iraq
  • 2,901
    U.A.E.
  • 2,702
    Kuwait
  • 1,929
    Mexico
  • 1,918
    Venezuela
  • 1,646
    Angola
  • 1,642
    Kazakhstan
  • 1,065
    Algeria
  • 969
    Oman
  • 735
    Azerbaijan
  • 682
    Malaysia
  • 616
    Qatar
  • 537
    Ecuador
  • 191
    Bahrain
  • 173
    Gabon
  • 148
    Eq. Guinea
  • 110
    Brunei
  • 105
    S. Sudan
  • 72
    Sudan
Sources: OPEC secondary source estimates for group’s members, including Equatorial Guinea, which joined in late May. Bloomberg, IEA estimates for non-OPEC members.

OPEC’s production-cut compliance rate rose to 94 percent last month from a revised 85 percent in July, Bloomberg calculations from the group’s secondary source data show. Six of the 12 OPEC members curbing output realized their goals. Some, including Saudi Arabia and Angola, cut by more than required. OPEC subsequently estimated that its compliance with the curbs in August was 96 percent, according to a person familiar with the matter. 

By How Much Did Countries Reduce Crude Production?

Thousands of barrels a day
Target
Cutback reached target
Cutback did not reach target
Non-OPEC nation
  • Saudi Arabia
    −486
    −522
  • Venezuela
    −95
    −149
  • Kuwait
    −131
    −136
  • Iraq
    −210
    −113
  • U.A.E.
    −139
    −112
  • Angola
    −78
    −105
  • Qatar
    −30
    −32
  • Gabon
    −9
    −29
  • Algeria
    −50
    −24
  • Ecuador
    −26
    −11
  • Eq. Guinea
    −12
    +8
  • Russia
    −300
    −319
  • Mexico
    −100
    −174
  • Azerbaijan
    −35
    −79
  • Kazakhstan
    −20
    −53
  • Oman
    −45
    −43
  • Brunei
    −4
    −15
  • Bahrain
    −10
    −6
  • Sudan
    −4
    −4
  • S. Sudan
    −8
    +1
  • Malaysia
    −20
    +44
Sources: Bloomberg, IEA estimates for non-OPEC nations; OPEC secondary-source estimates.
Note: In the absence of any OPEC announcement stating the starting level for Equatorial Guinea’s output cuts, Bloomberg uses the IEA’s estimation of the country’s October crude production of 140,000 barrels a day.

Oil prices have increased by more than 20 percent since tumbling to a year-to-date low in June. Field maintenance, stronger oil demand and greater compliance with output cuts have combined to provide support for crude. However, the Brent global benchmark remains stuck below its 2017 high of $57.10, set in January.

Price and Production

Crude remains below year-to-date high
Brent crude oil price as of
Total OPEC production (thousands of barrels a day)
Sources: Bloomberg, ICE Futures Europe

The IEA this month said global oil demand this year is set to climb by the most since 2015. An OPEC report a day earlier boosted the estimate for the amount of crude the group will need to supply next year. For now, the output-cut agreement is set to end in March, but OPEC is discussing extension of the curbs if the glut continues into its fourth year, according to people familiar with the talks.