Macro

OPEC Data: Iraq, Russia Exceed Oil Quotas by 350,000 Barrels/Day

OPEC+ nations exceed quotas by hundreds of thousands of barrels, with Russia over by 161,000 barrels per day.

By Mackenzie Crow

7/10, 08:38 EDT
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Key Takeaway

  • OPEC+ members Iraq, Kazakhstan, and Russia continue to exceed output limits, collectively pumping several hundred thousand barrels a day above quotas.
  • Despite Russia's cutback of 114,000 barrels/day in June, it still exceeds its quota by 161,000 barrels/day; Iraq is over by 189,000 barrels/day.
  • Brent crude futures are trading near $84/barrel but remain below the $100/barrel needed by Saudi Arabia for government spending.

OPEC+ Production Compliance Issues

Key OPEC+ nations, including Iraq, Kazakhstan, and Russia, continue to exceed their output limits, undermining efforts to stabilize global oil prices. According to a recent report from the Organization of Petroleum Exporting Countries (OPEC), these countries are collectively producing several hundred thousand barrels per day above their designated quotas. Despite Russia's noticeable cutback in June, it still exceeded its quota by 161,000 barrels per day, producing 9.139 million barrels daily. Iraq, on the other hand, reduced its output by 25,000 barrels per day but remained 189,000 barrels per day above its limit. These overproductions pose a significant challenge to OPEC+ leader Saudi Arabia, which needs oil prices closer to $100 per barrel to sustain its government spending, as estimated by the International Monetary Fund (IMF).

Market Reactions and Price Movements

Brent crude futures are currently trading near $84 per barrel in London, reflecting a more than $2 drop this week. The American Petroleum Institute reported a 1.92 million barrel drawdown in U.S. crude stockpiles last week, with a significant reduction at the Cushing, Oklahoma hub. Despite these inventory declines, concerns over Chinese demand and uncertainty regarding the Federal Reserve's interest rate cuts have kept oil prices subdued. Brent traded below $85 per barrel, while West Texas Intermediate (WTI) hovered above $81 per barrel. "Concerns over Chinese oil demand have been growing recently," said Warren Patterson, head of commodities strategy for ING Groep NV, highlighting the impact of weaker-than-expected inflation data from China on market sentiment.

Russia's Export Dynamics

Russia's weekly crude exports experienced a significant drop, the largest since the 2022 invasion of Ukraine, with shipments falling to 2.67 million barrels per day in the week to July 7. This decline is attributed to improved compliance with OPEC+ output targets and increased refinery runs. Rosneft PJSC and Lukoil PJSC, Russia's largest crude exporters, plan to cut their combined shipments from Novorossiysk by about 200,000 barrels per day this month. Additionally, vessels targeted by Western sanctions remain mostly idle, further complicating Russia's export dynamics. The gross value of Russia's crude shipments fell to $1.44 billion in the week to July 7, down from $1.92 billion the previous week, despite a fourth consecutive week-on-week increase in oil prices.