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Pledged overdue output cuts from Iraq in the next couple of months — if delivered — could help mitigate rising OPEC oil supply amid an expected recovery in demand vs. a weak 2Q. Our analysis points to the group’s overall good 93% compliance with quotas in July, despite sustained non-adherence by some member nations.
Iraq pledges extra cuts to offset non-compliance
As OPEC starts opening the taps and prepares to return as much as 1.5 million extra barrels of crude a day into the market in August, the group is showing good overall compliance with July’s output cuts. Some member nations were still non-compliant, however, and could continue to see pressure from fellow members. One of the cases in point being Iraq, which hasn’t delivered pledged extra cuts. The country has, however, vowed to deliver an extra 400,000-barrel cut in August and September to compensate. Meanwhile, Nigeria has made scant progress in getting closer to its quota with a compliance level of 67% in July.
Saudi Arabia raised its output by 920,000 barrels a day in July — as it phased out the extra cuts in June — though it was still below its implied quota level.
