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H1 OPEC+ Crude Output Higher YoY Despite Cuts: JP Morgan

OIL

OPEC+ pumped around 44.6mbpd of crude in the first half of this year, up by 175kbpd year on year, despite the additional voluntary output cuts by the group that came into effect in May, JP Morgan said in a note.

  • While the oil market is finally starting to show signs of tightening, to fully regain market power this year, the bank estimates OPEC+ needs to deepen its cuts by another 0.7mbpd in 2H23 in addition to already announced reductions. The full 0.7mbpd cut would need to be extended into 2024 in order to offset both non-OPEC supply growth and rising output from some non-core OPEC members.
  • Even with OPEC’s existing 1.16mbdd voluntary cuts extended into 2024, the bank still projects a 0.6mbpd surplus next year, as non-OPEC production fully matches growth in global demand.
  • JP Morgan forecasts this year’s global demand gain of 1.6mbpd will be fully covered by the 2.2mbpd rise in non-OPEC supply, with most of the supply growth coming from the Atlantic Basin.
  • US oil operators are leading the surge with 1Q23 total US liquids production rising by 1.55mbpd above last year’s levels, with 1.1mbpd gains coming from crude alone. For 2023, the bank projects US production to grow 1.3mbpd.

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