OPEC Delivered Barely Half Oil Production Increase it had Planned for October as Nigeria and Angola Continued to Struggle with Output Losses.

OPEC is reviving supplies halted during the pandemic, but added only 140,000 barrels a day last month because of the difficulties faced by both countries, according to a Bloomberg survey based on ship tracking data. The under-performance may increase the impatience expressed by the United States President, Joe Biden and other world leaders, who have been pressing OPEC and its allies to alleviate surging fuel prices by opening the taps. Core members of the cartel including Saudi Arabia, Kuwait and Iraq have so far rebuffed those calls as the group prepares to meet this Thursday.

The combination of a recovery in fuel consumption after the pandemic and constrained supply has led to a global energy crunch which has been felt most acutely in natural gas markets, as Brent crude, Nigeria’s benchmark, has rallied 30 per cent since late August.

While Middle Eastern members of the cartel like Saudi Arabia, Iraq and the United Arab Emirates are all increasing supplies in line with their schedule, their counterparts in Africa are lagging behind. Angola’s production slumped by 70,000 barrels a day to 1.1 million a day, sinking back to the 14-year low reached earlier this year, according to the survey as the country has been plagued by investment constraints resulting in declining supply from deep water oil fields.

Nigeria’s output fell by 60,000 barrels a day to 1.44 million a day in October, just above the five-year low hit in August. Last week, Royal Dutch Shell Plc was forced to invoke a clause suspending exports from its Bonny Oil Terminal in the country after a pipeline halt, Bloomberg reported.

Total production by the group’s 13 members was 27.58 million barrels a day, while overall, the cartel is curbing output by 15 per cent more than stipulated by its production quotas.

The development meant that the increase in OPEC’s oil output in October fell short of the rise planned under a deal with allies as involuntary outages in some smaller producers offset higher supplies from Saudi Arabia and Iraq.

OPEC states and their allies, a grouping known as OPEC+, are relaxing output cuts made in 2020 as demand recovers from the coronavirus pandemic, but some members are not delivering the full boosts promised due to a lack of capacity.

The OPEC+ alliance is also wary of pumping too much oil in case of renewed setbacks in the battle against COVID-19. The supply restraint has helped support oil prices, which are trading near $85 a barrel and close to a three-year high, prompting the United States and other consumers to urge producers to supply more crude.

The OPEC+ agreement allowed for a 400,000 bpd production increase in October from all members, of which about 254,000 bpd is shared by the 10 OPEC members covered by the deal, OPEC figures seen by Reuters showed.

With output undershooting the planned increase last month, OPEC’s compliance with its pledged cuts increased to 118 per cent in October the survey found, from 114 per cent a month earlier.

The biggest rise in October came from OPEC’s top two producers, Saudi Arabia and Iraq, which both boosted output largely as promised according to the agreement.

Kuwait, the United Arab Emirates and Algeria also made increases as called for by their higher October quotas. Angolan exports bucked their declining trend and rose in October, while output declined in the Republic of Congo, Equatorial Guinea and Gabon, the survey found, owing to a lack of capacity to produce more. Aside Nigeria, the second largest decline was in Libya, one of the countries exempt from OPEC supply curbs, due to a pipeline leak.

Meanwhile, the Bank of America has anticipated that Brent crude would hit $120 a barrel by the end of June 2022. It made the prediction in a note yesterday.

A global energy crisis has sent prices for gas and coal soaring around the world, and this has turbocharged the recovery in benchmark London- and New York-traded oil futures, Bank of America Corp. analysts including Francisco Blanch wrote in the note. Several oil traders have said $100 crude was fast approaching as demand outstrips supply and a climate-inspired slowdown in investment in new sources threatens to allow reserves to wither.

A surge in gasoline demand along with a rebound in middle distillates, diesel and jet fuel, coupled with refining-capacity constraints could accelerate the rally into 2022, the analysts wrote.

Also, yesterday, oil prices dropped as China’s release of gasoline and diesel reserves eased concerns over tight global supply, while investors cashed in ahead of the November 4 OPEC meeting of major crude producers.

Brent crude futures dropped 29 cents, or 0.4 per cent, to $83.43 a barrel by 0351 GMT, after gaining 6 cents on Friday, while U.S. West Texas Intermediate (WTI) crude futures slid 40 cents, or 0.5 per cent, to $83.17, having risen 76 cents on Friday, although they later closed at $84.63 and $84 respectively for the day.

The drops came after China said in a rare official statement that it had released reserves of the two fuels to increase market supply and support price stability in some regions.

All eyes are now on Thursday’s meeting of OPEC, Russia and their allies, together called OPEC+, with analysts expecting them to stick to a plan to add 400,000 barrels per day of supply in December.

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