Underperforming OPEC Nations See Targets Adjusted Downward for 2024 While UAE Up

Saudi Arabia surprised markets on Sunday with an additional voluntary cut of 1 million bpd for the month of July, which comes on top of its existing 500,000 bpd announcement in April and could be extended depending on market conditions.

• “We want to just ice the cake with what we have done. ... We will do whatever is necessary to bring stability to the market,” Saudi Energy Minister Prince Abdulaziz said.
• “The cut will be a real million [bpd]. … We have always honored our commitments,” he added.
• The UAE’s targeted production quota will jump by 200,000 b/d to 3.219 million bpd, as part of a long-term effort to steadily increase its allocation.
• Eight OPEC states that have been underperforming targets will get a downward adjustment of a combined 622,000 bpd. The lion’s share of the reduction comes from Nigeria, with a baseline that’s 362,000 bpd lower. Angola’s baseline drops by 175,000 bpd.
• Nigeria issued a statement hours after the end of the meeting saying the agreement would not hinder its aim to boost the country's oil production back above 1.5 million bpd from an April level of 1.19 million.
• Under OPEC’s new 2024 agreement the baseline concept has been removed and the group is back to using production quotas which directly reflect how much each state is expected to produce.
• This structural disconnect between countries ‘baselines’ and an inability for many to even meet them has meant that the headline production cut of 2 million bpd announced in October actually removed far less oil from the market than calculations would have indicated.