Oil Price Rise Blamed in Part on OPEC, Russian Output Shortfalls
PEC and its Russia-led partners have promised to increase oil production to pre-pandemic levels this year but are falling short of those public commitments, stoking fast-rising global crude markets.
Last month, the Organization of the Petroleum Exporting Countries and its Russia-led allies increased their collective production by 250,000 barrels a day, or 60% of what the two groups promised for the month, according to the International Energy Agency. Overall, the group is pumping 790,000 barrels a day below its publicly stated targets, said the Paris-based watchdog, which advises industrialized nations on energy.
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OPEC+ cut its production deeply in early 2020 by a collective 9.7 million barrels a day, equivalent to about 10% of global demand at the time. The group has since agreed to restore 6.4 million barrels a day of those cuts. It has promised to further increase output each month by 400,000 barrels a day until the group is back at pre-Covid-19 pumping levels.
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In December, Nigeria, a top African producer, pumped 460,000 barrels a day below its quota, after a malfunctioning barge triggered the shutdown of a major export terminal. In Angola, technical issues and a lack of investment have sent production to 17-year lows.
Last month, Russia pumped below its OPEC+ quota for the first since the group cut output. It had promised to boost output in the month by 20,000 barrels a day, but instead cut output by 10,000 barrels a day, the IEA said, blaming slower-than-expected development of some fields. A Russian Energy Ministry spokesman said he couldn’t immediately comment.
The IEA cut Iraq’s sustainable capacity estimates by 140,000 barrels a day due to lingering bottlenecks in aging southern infrastructure. Pipelines are frequently targeted by insurgents or fail due to lack of maintenance. In the most recent outage, a key oil pipeline to Turkey was knocked out by an explosion blamed on a falling pylon.
Those and other obstacles leave Saudi Arabia and the U.A.E. as the world’s only major producers with sizable spare capacity, about 3.25 million barrels a day, according to the IEA.
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