OPEC+ announces compensatory cuts

The Secretariat of the Organisation of the Petroleum Exporting Countries (OPEC) has announced 2.284 million barrels per day (bpd) of production cuts.

This is to compensate for overproduction in the first six months of the year. Russia, Iraq and Kazakhstan exceeded their quotas by 480,000 bpd, 1.184 million bpd and 620,000 bpd, and have now submitted plans to compensate for this.

OPEC said in a press release about this:

“The 37th OPEC and non-OPEC Ministerial Meeting (ONOMM) held 2 June 2024 reiterated the critical importance of adhering to full conformity and the compensation mechanism. In light of the above, the OPEC Secretariat received compensation plans from Iraq, Kazakhstan and the Russian Federation for their overproduced volumes.”

Under the schedule for compensation, the overall oil production for all OPEC+ countries in July will be 35.52 million bpd, which is slightly below the previous target of 35.6 million. October this year will see a bigger 355,000 bpd reduction. There will also be a further reduction due to Kazakhstan’s Kashagan field being scheduled for repairs, according to the country’s Ministry of Energy.

These and the other production cuts by OPEC+ members may be offset, at least partially, by growing production in other oil-producing countries. For example, crude oil production in the US is set to rise to 13.19 million bpd this year, according to the US Energy Information Administration, and reach a new record of 13.65 million bpd next year, as oil giants like ExxonMobil and Chevron, the makers of the Mobil and Texaco grease and lubricant products, ramp up production from their shale assets.

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