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Russia, Iraq, and Kazakhstan have submitted their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. According to OPEC, the entire over-produced volumes will be fully compensated for over the next 15 months through September 2025, with Russia ‘paying back’ a cumulative 480 kb/d, Iraq 1,184 kb/d, and Kazakhstan 620 kb/d.
Last month, OPEC+ announced that it would extend a cut of 1.65 million barrels per day, announced in April 2023, until the end of 2025. The cut was due to expire at the end of the current year. The group will also extend a cut of 2.2 million barrels per day, announced in November 2023, until the end of September this year, after which it will be gradually phased out on a monthly basis by the end of September 2025. In effect, OPEC+ will continue to restrict oil supply for at least the next 18 months but gradually start adding some extra barrels back into the market later this year.
The production cuts will, however, be partly offset by growth in non-OPEC production. Back in April, OPEC predicted that non-OPEC supply will grow by 1 million b/d in 2024, 100,000 b/d lower than its previous forecast. The group also trimmed its non-OPEC supply growth in 2025 by 100,000 b/d to 1.3 million b/d. According to OPEC, the bulk of this growth will come from the US, Brazil, Canada, Russia, Kazakhstan and Norway. According to the U.S. Energy Information Administration (EIA), U.S. crude oil production will rise to 13.19 million barrels per day (bpd) this year, and by another 460,000 bpd to hit 13.65 bpd in 2025, an all-time high.
OPEC has predicted that global oil demand will grow by 2.2 million b/d in 2024, and by 1.8 million b/d in 2025.
