Not even a full month into OPEC’s deep production cut agreement, rumours have already surfaced that there is a difference of opinion over a possible extension of the oil production cuts—as usual, with Saudi Arabia on one side and Russia on the other.
But those discussions seem premature, given the latest Reuters survey that suggests that the cartel failed to fully comply with its agreed-upon quotas in May.
According to the survey data, Nigeria and Iraq did not live up to their commitments under the massive production cut deal that promised to take 9.7 million barrels of oil production per day out of the oversupplied market.
Overall, the survey showed the group cut just 5.91 million bpd from April levels, producing 24.77 million bpd. This is 4.48 million bpd of the promised reduction, or 74% compliant.
While some have suggested that the reason for OPEC’s failure to bring production down to promised levels is due to contractual obligations with buyers given the short timeframe between the date the agreement was made and its implementation, Iraq has a history of production quota noncompliance.
For May, Iraq reached just 38% compliance with its promised cuts.
Nigeria was even less faithful to the quotas, cutting just 19% of what it promised, according to the Reuters survey.
Despite the few members who failed to bring production down as low as promised, OPEC’s overall May production was the lowest that it’s been since 2002, according to Reuters.
The sharp cuts in May, however, are watered down by the fact that several OPEC members, including Kuwait, the UAE, and Saudi Arabia, produced record-high volumes in April, which flooded the market while the world was beginning to see what was a massive drop off in demand.