OPEC receives compensation plans from Iraq, Kazakhstan and Russia

The OPEC Secretariat has received compensation plans from Russia, Iraq, and Kazakhstan for producing crude oil above their designated quotas in the first six months of 2024.

PHOTO: Flag of OPEC. Getty Images

The combined overproduction from the three countries totalled 2.28 million b/d between January and June 2024. During this period, Iraq exceeded its crude production quota by 1.18 million b/d, Kazakhstan by 620,000 b/d and Russia by 480,000 b/d, according to OPEC.

The countries will make up for the excess supply in full over the next 15 months, ending in September 2025, the Vienna-headquartered group said. Brent’s price is expected to gain following the announcement.

Russia will trim production by 10,000 b/d and 30,000 b/d in October and November, respectively. The remaining 480,000 b/d excess production will be offset between March and September 2025.

Iraq and Kazakhstan have started cutting production this month and will continue through September next year, OPEC said.

“Sentiment was also boosted by reports that Russia is planning to make extra crude output cuts in October and November, and also between March and September next year,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

In June, the OPEC+ said that it would extend its 2.2 million b/d production cut that commenced in November 2023 until the end of September this year. This could put some downward pressure on oil prices, given the group's decision to gradually unwind the cut by the end of September next year.

The Saudi-led coalition previously stated that it would focus on pushing oil prices higher and change its crude output plans according to market conditions. It predicts that global oil demand will grow by 2.2 million b/d in 2024, followed by 1.8 million b/d growth in 2025.

By Aparupa Mazumder 

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