OPEC+ agreed on Sunday to keep its oil production quota for next month unchanged from this one, in line with expectations, after it unwound its production cuts earlier this year in a bid to offset the deepening supply shortage from the Middle East.
The total for October and November stands at 31.01 million barrels per day for the eight OPEC+ members covered by the quota. However, in August the group only produced 25 million barrels daily, which was well below its own quota.
Indeed, most of the unwinding of production cuts that has happened since the start of the U.S. and Israeli war on Iran has only happened on paper, as the Strait of Hormuz remained paralyzed for months. Now, there are reports saying that oil export flows via Hormuz are back to pre-war levels—yet OPEC+ production remains below the group’s own quotas.
“The OPEC+ group of seven kept their production ceilings unchanged, in line with market expectations. That said, despite rising flows through the Strait of Hormuz, their output levels remain well below quota,” UBS’ Giovanni Staunovo said, as quoted by Reuters. “Consequently, the oil market remains tight,” the Swiss bank’s commodity analyst also said.
This is an interesting state of affairs because the latest data about Hormuz suggested oil flows out of the chokepoint were now above pre-war levels. This would normally mean more oil getting produced, but this is apparently not the case based on OPEC+ numbers. Storage releases are, of course, one way to explain the discrepancy. Another is that more oil is going for export.
Per Kpler data cited by Reuters, the seven-day moving average in the week to October 1, stood at 18.5 million barrels daily for the whole of the Middle East, including Hormuz and the Gulf of Oman, and Bab El-Mandeb in the Red Sea.
By Irina Slav for Oilprice.com
