BY: Moses olajuwon Obajemu
Compliance with OPEC+ oil output cuts stood at 95 percent and rose to 97% in July, according to OPEC+ sources and a draft report seen by Reuters on Monday, two days ahead of a meeting of key OPEC+ producers to review adherence with their production pact as demand slowly recovers.
The Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, have been cutting output by a record volume since May to tackle the fallout from the COVID-19 pandemic which has hit oil demand.
Compliance with the cuts by OPEC+ was 95% in July, reaching up to 97% including Mexico, according to a draft report by a joint monitoring technical panel of key OPEC and non-OPEC producers, known as the JTC, which met on Monday.
A ministerial OPEC+ monitoring committee, known as the JMMC, is meeting on Wednesday to review the oil market and compliance with the global oil supply reduction pact. The JMMC advises the whole of OPEC+ and does not make decisions.
OPEC+ sources said the JTC did not recommend making any changes in the current production agreement and was focusing on adherence by countries such as Iraq, Nigeria and Kazakhstan, which have pledged to improve their compliance and compensate for their overproduction in recent months.
The JTC has considered a scenario of substantial downside risk to oil demand if the coronavirus pandemic conditions worsen, according to the draft report. The panel has called for “vigilance and close monitoring of the implementation of the compensation for overproduction,” it said in the report.
Compliance of 95%-97% is high by OPEC standards. In July, top exporter Saudi Arabia was still pumping below its target and Iraq and Nigeria, while lagging the Gulf OPEC members on compliance, were pumping less than in earlier months, according to a Reuters survey and other assessments.
In August, OPEC+ eased its cuts to 7.7 million barrels per day (bpd) from 9.7 million bpd previously, a record cutback, as demand partially recovered.
Russian Energy Minister Alexander Novak said last week there had been no additional proposals to change the deal.
Brent crude rose above $45 a barrel on Monday and has more than doubled since reaching a 21-year low below $16 in April, thanks in part to the OPEC+ deal.