OPEC production dropped 1.05 million bpd in November to 28.79 million bpd according to Bloomberg estimates. It is the largest one-month decline since June 2020. OPEC last month agreed to cut their production quotas by two million bpd in the face of weakening global sour crude markets. The new quota agreement was expected to yield actual supply cuts of about one million bpd across calendar 2023 and this was achieved in the first month under the new agreement.
As expected, the bulk of the decline was in the Gulf states. The largest portion of this was Saudi Arabia, who cut their production by 470,000 bpd. UAE output decreased 240,000 bpd while Kuwait’s fell 140,000 bpd. Libyan production was down 80,000 bpd to 1.09 million bpd. This is notable because Libya has recently been more successful in holding its production nearer its capacity of 1.2 million bpd following years of instability and civil war. Venezuelan production increased a modest 30,000 bpd to 690,000 bpd and is approaching present expected capacity of about 710,000 bpd. Output dropped as low as 310,000 bpd in 2020 and was closer to three million bpd a decade ago. The US has just granted Chevron a license to resume some crude production and exports in Venezuela which will bring modest new supply upside here.
Status Quo Expected from Monday’s Meeting
OPEC+ will gather early morning December 5th for their monthly conference. Early this week there were rumblings that OPEC was considering additional cuts to quotas given the steep decline in crude prices and emergence of front end contango. When OPEC announced their meeting would be done remotely this month expectations for major change declined. Likewise, oil prices have rebounded materially this week. We think the recent delays and confusion around the EU decision on Russian price caps also incentivizes the group to kick this decision down the road, until at least next month.