Eight OPEC+ countries delay planned Oct oil output increase by two months, overproduction compensation schedule confirmed
MOSCOW. Sept 5 (Interfax) - Eight OPEC+ countries that are voluntarily reducing oil production by 2.2 million barrels per day and planned to gradually roll back these restrictions from October have postponed this decision by two months, OPEC said in a press release.
The eight have agreed to extend their additional voluntary production cuts for two months until the end of November 2024, after which these cuts will be gradually phased out on a monthly basis starting December 1, 2024 and ending in December 2025, according to a new schedule.
However, depending on the market situation, the planned increase in output can be paused or reversed as necessary, OPEC said.
Countries that previously overproduced have reconfirmed their commitment to compensate for the entire overproduced volume by September 2025, it said. Iraq and Kazakhstan, who have overproduced since January 2024, "have strongly reaffirmed their commitment to the agreement and to their compensation schedules submitted to the OPEC Secretariat," the press release said.
"In August 2024, Saudi Arabia, Russia, the United Arab Emirates, Kuwait, Algeria, and Oman, conducted two ministerial discussions with Iraq and Kazakhstan. Both countries were urged to achieve full conformity and compensate for the overproduced volumes since January 2024. Iraq and Kazakhstan committed to engage with secondary sources to outline their plans for production adjustments to achieve compliance and meet the compensation schedules they submitted to the OPEC Secretariat on August 22nd," the press release said.
Iraq and Kazakhstan confirmed their commitment during the OPEC Secretary General's visits in late August, conducted in coordination with Saudi Arabia's Minister of Energy and Chairman of the OPEC and non-OPEC Ministerial Meetings Abdulaziz bin Salman.
"During those visits, the OPEC Secretariat organized workshops with the secondary sources where both countries provided extensive details on the immediate and concrete measures they are implementing to achieve full conformity with the required production levels and to meet their compensation schedules for August and for September. These measures included advancing field maintenance plans and reducing production alongside with delaying and canceling spot sales for the month of August," OPEC said.
"Moreover, the countries committed to adjust compensation plans for any over produced volumes in August," the press release said.
Iraq and Kazakhstan were supposed to begin compensating for the amounts they overproduced in the first half of 2024 in July, but Kazakhstan did not sufficiently reduce output in July, while Iraq even increased production. The countries subsequently presented updated compensation plans to OPEC, now also including for July, that amounted to about 1.44 million bpd for Iraq and 700,000 bpd for Kazakhstan.
Data on OPEC+ production for August will only be disclosed next week.
Russia also exceeded its commitments in the first half, by 480,000 bpd, and presented a compensation schedule, but its compensation is only supposed to start in October, in the amount of 10,000 bcm, and the 30,000 bpd in November. The main amount of compensation for Russia will begin next March.
Interfax sources said the compensation schedule remains unchanged. There, by Interfax estimates, production by all OPEC+ countries should drop by almost 250,000 bpd to 35.24 million bpd in October from 35.49 million bpd in September, but then increase by 180,000 bpd to 35.45 million bpd in November. Kazakhstan will significantly reduce output in October due to scheduled maintenance at the Kashagan field, which will enable the country to compensate for a considerable portion of its overproduction.
The previous production schedule, taking into account compensation, assumed that OPEC+ countries would reduce production to 35.42 million bpd in October.