(Bloomberg) -- OPEC and its allies are pumping half a million barrels a day below the target they set two months ago as output drops in countries from Iran to Venezuela, according to several delegates.
The group is currently over-complying by 29 percent, meaning it’s pumping less than it pledged, the delegates said, asking not to be identified because the information is private. While there won’t be any new production proposal at a meeting this weekend in Algiers, a renewed pledge to bring the group back to 100 percent compliance with targets would allow Saudi Arabia to open the taps.
OPEC+ officials are gathering Saturday in Algiers to review production figures ahead of a meeting of the Joint Ministerial Monitoring Committee on Sunday, a group that includes the oil ministers of Saudi Arabia and Russia and observes producers’ compliance. Officials are so far not discussing any proposal beyond a June agreement to achieve 100 percent compliance with quotas initially established in 2016, the delegates said.
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Oil prices have climbed about 18 percent this year amid mounting concern that dwindling production in some countries will cause a shortfall. Declines in Iran, Venezuela, Kazakhstan and Mexico are largely to blame for the over-compliance in August, delegates said. Yet divisions in the Organization of Petroleum Exporting Countries are making it almost impossible to agree on collective action to cool the rally.
While Saudi Arabia -- along with non-OPEC ally Russia -- is eager to temper prices with more supply, Iran feels such moves would steal the market share it’s losing to U.S. sanctions.
While delegates attributed the August compliance figure to declines in certain nations, output estimates from the International Energy Agency suggest a figure closer to 100 percent for August. In any event, the so-called JMMC has no mandate to decide on how output increases will be shared out to reach full compliance, delegates said, adding that the decision will be taken at the next ministerial meeting in Vienna.
--With assistance from Nayla Razzouk, Salma El Wardany, Elena Mazneva and Salah Slimani.
To contact the reporters on this story: Javier Blas in London at jblas3@bloomberg.net;Grant Smith in London at gsmith52@bloomberg.net;Wael Mahdi in Kuwait at wmahdi@bloomberg.net
To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Amanda Jordan
©2018 Bloomberg L.P.
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