Russia’s crude production in October was nearly in line with its OPEC+ target, according to recent data. The country produced 8.973 million barrels per day (bpd) last month, marking a slight increase of around 3,000 bpd compared to September. This figure was just 5,000 bpd above its OPEC+ quota for October. Russia is currently adhering to two separate output reduction plans: a 500,000 bpd cut that was introduced early last year, and a 471,000 bpd reduction pledged in March, which is set to end by the close of 2024.
In July, Russia, Iraq, and Kazakhstan submitted plans to the OPEC Secretariat detailing how they would compensate for crude production above their agreed quotas in the first half of 2024. OPEC confirmed that these overproduced volumes will be fully offset by the three nations over the next 15 months, through to September 2025. Russia’s compensation will total 480,000 bpd, Iraq’s will be 1.184 million bpd, and Kazakhstan will reduce 620,000 bpd.
Commodity analysts at Standard Chartered estimate that the compensatory cuts by Russia, Iraq, and Kazakhstan will amount to a combined reduction of 370,000 bpd in October. From November 2024 to September 2025, the cuts will range between 162,000 and 206,000 bpd per month. Adding these compensation cuts to the recently adjusted reduction targets, due to delays in tapering, Standard Chartered projects that OPEC’s total production will be 530,000 bpd lower in Q4 2024, and 540,000 bpd lower in Q1 and Q2 of 2025. For Q3 2025, the reduction could reach 560,000 bpd if all commitments are honored.
The analysts caution that the market’s current assumption—that there will be no compensation for overproduction—is misguided. They argue that it is unlikely other OPEC+ members, especially Saudi Arabia, will tolerate further deviations from agreed targets. Saudi Arabia, in particular, is expected to hold the overproducers accountable. The high-profile visits of OPEC Secretary General Haitham al Ghais to Iraq and Kazakhstan suggest that OPEC is serious about ensuring these cuts are implemented.
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