The Organization of the Petroleum Exporting Countries and its allies, OPEC+, said some members would have to reduce the group’s total production by an additional 2.31 million barrels per day in order to deal with its oversupply issues.
This was disclosed through an internal OPEC+ report which was reported by Reuters. Nairametrics understands that the oversupply between May and July should be compensated from August through September.
READ: Saudi Crown Prince in talks with President Buhari over oil price stability
Yesterday, Nairametrics reported that the Saudi King, Salman bin Abdulaziz, spoke with Nigeria’s President, Muhammadu Buhari on the need for Nigeria to comply with its OPEC+ production quotas. Nigeria, Iraq, and other non-compliant members were placed on extended cuts just before the cartel’s meeting this week.
OPEC data for the period of May-July shows that Nigeria, Iraq and others did not comply with their production cut quotas for the period, having recorded overproduction of 50,000 barrels per day for the period. Russia, for instance, overproduced by 280,000 bpd while Kazakhstan overproduced by 190,000 bpd for the same period.
READ: OPEC+ to reduce production cuts in August to 7.7 million barrels a day
OPEC+ agreed to production cuts of 9.6 million barrels after record lows in April. Following the rebound of oil prices to above $40, the group plans to limit production cuts by 7.7 million bpd this month. However, with the new report revealed by Reuters, total production cut would settle at 8.85 million bpd if the additional 2.31 million bpd are added to OPEC production numbers.
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The report also forecasts global oil demand to decline by 9.1 million bpd for the rest of the year, 100,000 higher than OPEC’s previous prediction. The group expects oil demand decline to rise to just 7 million bpd by 2021.
In the case of no vaccine and longer COVID-19 outbreaks in Asia, North America and Europe, OPEC+ forecasts demand to decline by 11.2 million bpd for the rest of the year.