OPEC Oil Output Holds Steady With Saudi Cuts Offsetting Iran Gains

OPEC’s oil production held broadly steady last month as curbs by group leader Saudi Arabia offset gains from other members, such as Iran.

(Bloomberg) — OPEC’s oil production held broadly steady last month as curbs by group leader Saudi Arabia offset gains from other members, such as Iran.

The kingdom’s output fell by 170,000 barrels a day, exactly countering a combined increase from Iran and Nigeria, according to a Bloomberg survey. The Organization of Petroleum Exporting Countries collectively pumped 27.82 million barrels a day in August, or 40,000 more than the previous month.

The Saudis have persisted with their extra 1 million barrel-a-day supply cutback, introduced in July to shore up global oil markets against a darkening economic outlook in China, the world’s biggest fuel consumer.

Traders widely expect Riyadh will soon announce another extension of the curbs into October, even as crude prices climb higher. Futures hit $85 a barrel in New York on Friday for the first time since November, but the Saudis appear to need even higher prices to cover government spending. 

The kingdom pared back production to its pledged level of 8.98 million barrels a day in July, a two-year low, according to the survey. Exports also fell sharply, tanker tracking data show. 

The retreat in Saudi production coincides with a revival in its political adversary, Iran, which restored output to a five-year high of just over 3 million barrels a day last month. The Islamic Republic is exempt from OPEC quotas because its production has been hit by US sanctions.

Tehran’s recovery comes as US officials acknowledge they’ve relaxed the enforcement of some sanctions on the country while it engages in tentative diplomacy with Washington. Permitting more Iranian supplies to leak onto the market could help President Joe Biden calm gasoline prices, which are nearing $4 a gallon.

The next-biggest boost among OPEC members last month came from Nigeria, which is pumping below its quota following a slew of disruptions and thus permitted to increase. Output rose by 80,000 barrels a day to 1.34 million a day following the restart of its Forcados terminal.

While most OPEC nations have been unable to aid the Saudis in making deeper supply cutbacks, Russia — which belongs to a wider alliance called OPEC+ — is belatedly providing some assistance. Moscow promised to reduce exports by 300,000 barrels a day in September, and said this week is prepared to make further commitments.  

The OPEC+ coalition is due to hold an interim monitoring session on Oct. 4, and then convene a full ministerial meeting in late November. 

Bloomberg’s survey is based on ship-tracking data, information from officials and estimates from consultants including Kpler Ltd., Rapidan Energy Group and Rystad Energy. 

–With assistance from Brian Wingfield, Alex Longley, John Deane, Lucia Kassai, Anthony Di Paola and Julian Lee.

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