Russia’s crude output in October in-line with OPEC+ target

Russian data show the nation’s crude production in October was nearly in-line with its OPEC+ quota. The country pumped 8.973 million barrels a day of crude last month, up by ~3,000 barrels a day compared with September, and just 5,000 barrels a day above the nation’s quota for the month. Russia is currently implementing two sets of curbs to its crude output: a 500,000 barrel-a-day reduction announced early last year, a s well as a 471,000 barrel-a-day cut it promised in March that will end at the end of the current year.

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Back in July, Russia, Iraq and Kazakhstan submitted their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. According to OPEC, the entire over-produced volumes will be fully compensated for over the next 15 months through September 2025, with Russia ‘paying back’ a cumulative 480 kb/d, Iraq 1,184 kb/d and Kazakhstan 620 kb/d.

According to commodity analysts at Standard Chartered, the compensatory output cuts by the three OPEC members work out to a combined 370 kb/d reduction in October, and then an amount varying between 162 kb/d and 206 kb/d for November 2024 through to September 2025. StanChart has worked out that adding the compensation schedule to the recently announced reduction in targets due to delaying the implementation of tapering will result in OPEC production clocking in at 530 kb/d lower in Q4-2024; 540 kb/d lower in Q1 and Q2-2025 and 560 kb/d lower in Q3-2025, if all commitments are kept. StanChart has argued that the market’s current assumption that there will be no compensation reduction is wrong because it’s highly unlikely that other OPEC+ countries would take it lightly. StanChart says Saudi Arabia, in particular, is unlikely to accept any further backsliding on promises made by the overproducers, noting that the high-profile visits to Iraq and Kazakhstan by the OPEC Secretary General, Haitham al Ghais suggests that OPEC intends to follow up on the promised