OPEC’s oil production in June came in at the lowest level since May 1991 during the Gulf War, and collectively meeting its promised cut.
For June, OPEC cut its production to 22.69 million bpd, according to a Bloomberg survey using data compiled by Kpler, Rystad Energy, Rapidan Energy Group, and JBC Energy GmbH.
Saudi Arabia met its promised cut, holding production to 7.53 million bpd. Saudi Arabia also met its additional voluntary reduction that phases out in July.
While Kuwait and the UAE also met their promised cuts, they did not meet all of their voluntary cuts like Saudi Arabia did.
To no one’s surprise, Angola, Iraq, and Nigeria did not meet their promised cuts. Of the three, Angola was the most compliant at 83% of its pledged cuts in June, while Nigeria hit 77%. Iraq, the biggest laggard of the group during this cut and in previous cuts, managed to reach only 70% of its promised cuts. The laggards have all promised to make up for any overproduction in future months after the production cut deal expires.
Part of OPEC’s success in meeting its targets is spurred on by Venezuela, which produced just 340,000 bpd last month, albeit unwittingly. It is not bound by the production cut deal.
While OPEC is enjoying its success in delivering its promised cuts, it is still running up against a serious demand shock that is continuing to pressure prices. Despite the cuts, inventories are still high and remain significantly above the five year average in the United States, which offers the most transparent picture of the state of the oil market in terms of rig counts, oil and fuel inventories, DUC counts, and production data.
Oil prices were up on Wednesday afternoon, with Brent trading up nearly 2% at $42.07 per barrel and WTI crude sitting just below $40 per barrel, up 1.48% on the day.