Opec+ crude production increased last month but fell short of the 400,000 b/d agreed rise in quotas, as several members struggled to keep pace.
The 19 Opec+ countries participating in the production restraint deal hiked their collective output by just 300,000 b/d in December, according to Argus' survey. This left them 650,000 b/d below target, with 14 of the group falling sharply short of their quotas.
The largest individual increase was in west Africa, where Angola boosted output by 90,000 b/d to 1.2mn b/d. Although this was the highest monthly level of 2021, Angola was still 190,000 b/d below its December quota. Its prospects of maintaining output growth look slim in the short term, with exports scheduled to dip to 1.15mn b/d this month and 1.1mn b/d in February.
West Africa also saw the biggest individual decline last month, with Nigerian output tumbling by 50,000 b/d, defying state-owned NNPC managing director Mele Kyari's forecast that Abuja would reach its target by the end of the year. The drop reflects lower contributions from the Qua Iboe and Bonny Light streams, with the latter struggling to recover after force majeure on exports was lifted in late November.
The group's two largest producers, Saudi Arabia and Russia, added a respective 40,000 b/d and 10,000 b/d in December, but both were 70,000 b/d below their 10.02mn b/d targets. Russia's output growth has slowed in the last few months as it inches closer to its IEA-assessed 10.4mn b/d crude capacity.
Kazakhstan's production rose marginally to sit 100,000 b/d above its December quota, before protests against high fuel prices led to widespread disorder across the county at the turn of the year. Output disruption appears to have been confined to the Tengiz field for a few days, with limited public data suggesting a drop of around 70,000 b/d in Kazakh crude production in early January. Kazakhstan has been producing above quota for "seasonal needs", the energy ministry said last month.
Venezuela, which is exempt from quotas, managed to boost production by 70,000 b/d in December, with state-owned PdV using Iranian condensate and part of the local refinery yield to dilute and upgrade extra-heavy crude from the Orinoco belt into an exportable heavy sour grade. This hike was offset by an 80,000 b/d fall in deal-exempt Libya, where the Petroleum Facilities Guard shut down four fields — including the country's largest, the 300,000 b/d El Sharara field — between 20 December and 10 January.
Staying the course
The Opec+ coalition has agreed to maintain a 400,000 b/d monthly increase in quotas in January and February, ignoring calls from outside the group to unwind its 2020 production cuts more rapidly to stem the rally in oil prices. Omani energy minister Mohammed bin Hamad al-Rumhy reassured the market that the group intends to unwind its cuts at a pace that ensures demand does not outstrip supply.
"We are very careful at Opec+, and we will look at each month as we go," al-Rumhy said. "So far, I think 400,000 b/d is good because demand is increasing, and we want to make sure that the market is not overheating. We do not want to see $100/bl — the world is not ready for that."
Price increases over the past 12-18 months are partly the result of tightening global spare crude capacity following "limited" investment in the energy sector, according to al-Rumhy.