OPEC’s Allies Unite on Oil Cuts

Updated:

When it comes to oil supply cuts, the non-OPEC side of the 21-country alliance to prop up the market historically hasn’t been very unified. That changed in July. Last month, almost all of the non-OPEC members of the coalition adhered to their pledge to reduce output—a first since the accord began in 2017. OPEC on the whole performed better, too, thanks to deeper cuts by Saudi Arabia, its largest producer. Here’s a look at the latest from the coalition known as OPEC+.

OPEC+ Countries’ Compliance With Oil-Cuts Agreement in July

Percentage of cutback target reached
-20
0
20
40
60
80
100
120
140
160
180
200
U.A.E. S. Sudan Sudan Saudi Arabia Oman Nigeria Malaysia Kuwait Kazakhstan Iraq Gabon Eq. Guinea Congo Brunei Bahrain Azerbaijan Angola Algeria Russia Mexico Ecuador
Note: Positive numbers over 100 indicate full conformity with pledged cuts. A positive number below 100 indicates cuts, but less than pledged. Negative numbers show production actually increased relative to the baseline.
Source: Data compiled by Bloomberg

The Organization of Petroleum Exporting Countries and its partners are collectively trying to trim about 1.2 million barrels a day in a pact that—for now at least—lasts through March. OPEC’s compliance with agreed curbs rose to a rate of 146% last month, due primarily to Saudi over-compliance, versus a revised 130% in June. Non-OPEC adherence surged to 133% from a revised 98% previously.

OPEC+ Supply Cuts During 2019 and Beyond

Figures are in thousands of barrels a day
Country Reference OutputRef. Output Pledged Cut Output Target July 2019 June 2019 May 2019
Algeria 1,057 -32 1,025 1,027 1,005 1,029
Angola 1,528 -47 1,481 1,395 1,408 1,476
Congo 325 -10 315 326 337 327
Ecuador 531 -16 515 520 515 530
Eq. Guinea 127 -4 123 120 115 114
Gabon 187 -6 181 200 217 216
Iraq 4,653 -141 4,512 4,753 4,721 4,749
Kuwait 2,809 -85 2,724 2,678 2,674 2,710
Nigeria 1,738 -53 1,685 1,786 1,808 1,721
Saudi Arabia 10,633 -322 10,311 9,698 9,832 9,717
U.A.E. 3,168 -96 3,072 3,071 3,070 3,060
Total OPEC 26,756 -812 25,944 25,574 25,702 25,649
Azerbaijan 797 -20 777 753 769 777
Bahrain 217 -5 212 211 211 205
Brunei 115 -3 112 110 114 116
Kazakhstan 2,028 -40 1,988 1,972 2,014 1,749
Malaysia 697 -15 682 650 703 706
Mexico 1,993 -40 1,953 1,905 1,914 1,908
Oman 1,003 -25 978 978 979 978
Russia 11,747 -230 11,517 11,481 11,490 11,444
South Sudan 124 -3 121 153 153 147
Sudan 74 -2 72 72 72 72
Total Non-OPEC 18,795 -383 18,412 18,285 18,419 18,102
Total OPEC+ 45,551 -1,195 44,356 43,859 44,121 43,751
Notes: OPEC compliance measures crude output; non-OPEC adherence is for total oil production. For OPEC supply, Bloomberg uses secondary source data published in the organization’s latest Monthly Oil Market Report. OPEC reference output and target levels are from the group’s figures published Jan. 18, 2019. OPEC adjusted Ecuador’s starting point in March, to 531k b/d from 524k previously. For non-OPEC output, reference points, and target levels, Bloomberg uses preliminary data from the International Energy Agency. Includes revised figures.
Sources: OPEC, IEA

The alliance began curbing output more than two-and-a-half years ago and reset the terms of its agreement at the start of 2019. OPEC members Iran, Libya and Venezuela are exempt. In July fourteen nations cut by at least as much as agreed, the highest this year.

Historical Compliance 2017-18 by Country

OPEC compliance surged on involuntary curbs; non-OPEC adherence dissolved
Percentage of cutback target reached
-20
0
20
40
60
80
100
120
140
160
180
200
OPEC nations
 
Algeria
Angola
Ecuador
Eq. Guinea
Gabon
Iraq
Kuwait
Qatar
Saudi Arabia
U.A.E
Venezuela
Total
Non-OPEC nations
 
Azerbaijan
Bahrain
Brunei
Eq. Guinea
Kazakhstan
Malaysia
Mexico
Oman
Russia
South Sudan
Sudan
Total
Sources: For 2017-2018, Bloomberg calculated OPEC compliance from the producer group's secondary source data; preliminary International Energy Agency data for crude production were used for non-OPEC calculations. Includes revised estimates.

 Note: Equatorial Guinea joined OPEC in late May 2017. OPEC member Iran was allowed to boost output slightly under the original production deal and therefore was not listed in individual country data in this graphic. Republic of Congo joined OPEC in late June 2018 and also was not included in the data set. Qatar left OPEC as of January 2019.

Historical Compliance 2017-18 by Group

OPEC and its allies drifted apart on compliance
Cutback reached target
Cutback did not reach target
OPEC nations
*Target: 1,176
1,164
Dec.163%1,911
Nov.113%1,329
Oct.114%1,337
Sept.125%1,468
Aug.125%1,466
July124%1,453
June125%1,471
May159%1,866
April172%2,024
March167%1,966
Feb.155%1,827
Jan. 2018’18136%1,605
Dec.135%1,590
Nov.129%1,519
Oct.103%1,211
Sept.93%1,089
Aug.96%1,126
July86%1,013
June82%969
May109%1,269
April104%1,216
March109%1,264
Feb.97%1,125
Jan. 2017’1799%1,153
Non-OPEC nations
*Target: 546
558
Dec.3%16
Nov.10%55
Oct.39%215
Sept.26%141
Aug.86%471
July32%175
June56%307
May73%398
April80%438
March73%398
Feb.73%397
Jan. 2018’1882%449
Dec.103%565
Nov.91%498
Oct.110%600
Sept.141%771
Aug.130%711
July78%425
June74%402
May86%478
April78%435
March58%326
Feb.44%247
Jan. 2017’1752%288
Sources: OPEC secondary source estimates; IEA preliminary estimates on crude output for non-OPEC nations. Includes revised data. During this period, the alliance sought to curb supply by almost 1.8 million barrels a day combined, in most cases using October 2016 level as starting point. Targets are based on when the deal was originally struck in late 2016.

*Moves Equatorial Guinea's output cuts to OPEC in line with the nation's membership in the producer group..

Note: Targets and monthly production figures are in thousands of barrels a day.

Nine out of 10 non-OPEC producers adhered to the agreement last month, according to Bloomberg calculations from International Energy Agency preliminary data on total oil output. Only South Sudan failed to comply. Of OPEC’s four largest producers, Iraq was the only member not to conform.

July 2019 Oil Production

Thousands of barrels a day
Cutback reached target
Cutback did not reach target
Non-OPEC nation
OPEC nations
  • 9,698
    Saudi Arabia
  • 4,753
    Iraq
  • 3,071
    U.A.E.
  • 2,678
    Kuwait
  • 1,786
    Nigeria
  • 1,395
    Angola
  • 1,027
    Algeria
  • 520
    Ecuador
  • 326
    Congo
  • 200
    Gabon
  • 120
    Eq. Guinea
Non-OPEC nations
  • 11,481
    Russia
  • 1,972
    Kazakhstan
  • 1,905
    Mexico
  • 978
    Oman
  • 753
    Azerbaijan
  • 650
    Malaysia
  • 211
    Bahrain
  • 153
    S. Sudan
  • 110
    Brunei
  • 72
    Sudan
Sources: OPEC secondary-source estimates of crude output for organization’s members. IEA preliminary estimates of total oil supply for non-OPEC members.

OPEC itself is responsible for curbing output by 812,000 barrels a day below baseline levels. Last month Saudi Arabia alone cut by 935,000 barrels a day. Angola, Equatorial Guinea, Kuwait and the United Arab Emirates also complied, according to Bloomberg calculations from OPEC secondary source data on crude production.

By How Much Did Countries Reduce Oil Production?

Thousands of barrels a day
Target
Cutback reached target
Cutback did not reach target
Non-OPEC nation
OPEC nations
  • Saudi Arabia
    −322
    −935
  • Angola
    −47
    −133
  • Kuwait
    −85
    −131
  • U.A.E.
    −96
    −97
  • Algeria
    −32
    −30
  • Ecuador
    −16
    −11
  • Eq. Guinea
    −4
    −7
  • Congo
    −10
    +1
  • Gabon
    −6
    +13
  • Nigeria
    −53
    +48
  • Iraq
    −141
    +100
Non-OPEC nations
  • Russia
    −230
    −266
  • Mexico
    −40
    −88
  • Kazakhstan
    −40
    −56
  • Malaysia
    −15
    −47
  • Azerbaijan
    −20
    −44
  • Oman
    −25
    −25
  • Bahrain
    −5
    −6
  • Brunei
    −3
    −5
  • Sudan
    −2
    −2
  • S. Sudan
    −3
    +29
Sources: Bloomberg, IEA estimates of total oil supply for non-OPEC nations; OPEC secondary-source estimates on crude output.

The biggest non-OPEC producers are responsible for about 80% of that contingent’s oil cuts. Russia has continued to trim is output since the start of the year, and Mexico remains in compliance in part due to under-investment. Kazakhstan’s adherence has been somewhat erratic, but the country kept output relatively low last month. Its production is expected to drop in August and September, due to planned maintenance at oil fields.

Prices and Production

Brent crude oil price
OPEC’s total production (thousands of barrels a day)
Total U.S. production (thousands of barrels a day)
Note: OPEC output includes all members; Brent price as of
Sources: Bloomberg, ICE Futures Europe, U.S. Energy Information Administration

Despite its strong commitment to output cuts, the OPEC+ alliance continues to face twin headwinds: weak demand exacerbated by the U.S.-China trade war, and near-record U.S. production, driven by the country’s shale producers. The IEA earlier this month trimmed its forecasts for oil-demand growth this year and next, and OPEC said the oil market faces a “somewhat bearish” outlook, even as the producer alliance clamps down on supply.