OPEC+ has been setting a high bar for itself, boosting production quotas by 400kb/d each month since mid-2021. And while the group has consistently missed budgets, preliminary surveys of January production indicated the cartel had begun to turn things around. With official production statistics published Thursday, it appears the group has in fact not turned things around.
The “OPEC 10,” countries within OPEC but excluding Venezuela, Libya and Iran, were budgeted to increase production by 254kb/d in January. The remainder of the 400kb/d quota is being allocated to Russia and others. Survey results near month-end indicated the OPEC 10 had increased production 210kb/d. Official results released today indicate the increase was only 135kb/d. The core 10 now sit a full 748kb/d below self-imposed quota levels.
Serial underperformer Angola saw production decrease, with January volumes coming in more than 250kb/d below quota. Nigeria saw a boost in January volumes, up 60kb/d, leading the country to underproduce by only 285kb/d. Perhaps most interestingly, Saudi fell 123kb/d below budget in January.
Outside of the core, Libyan and Venezuelan volumes fell while Iranian volumes increased. In total, the three countries saw volumes fall 33kb/d month on month. Russian volumes for January increased 85kb/d, compared to the country’s budgeted 100kb/d increase.
It may be consensus that OPEC+ will underperform quota in 2022; however, the degree to which the group is underperforming will be tracked carefully. With inventories in rapid decline, prices spiking, and threat of war in Ukraine, it’s difficult to see balances improving. Particularly difficult if countries like Saudi are unable or unwilling to increase production rapidly from here.