Iraq, Kazakhstan pledge OPEC+ compliance after exceeding January 2024 production targets

(Bloomberg) – Iraq and Kazakhstan pledged compliance with new OPEC+ oil targets after failing to fully cut production as promised last month.

The OPEC+ alliance, which is led by Saudi Arabia, agreed to slash production during the first quarter to avert a global oil surplus and shore up prices. While several countries appear to have complied, Baghdad and Astana were once again delinquent.

Kazakhstan’s energy ministry conceded it had pumped above its limits in January and vowed to “compensate for the overproduced volumes over the next four months.” It didn’t specify the excess produced.

Its counterpart in Iraq released a slightly more nuanced statement, promising to review external estimates of its production and compensate for any excess, also over a four-month period. The nation has in the past disputed OPEC’s assessments of its output.

Iraq issued its statement following a visit to Baghdad from Saudi Energy Minister Abdulaziz bin Salman.

Data compiled by OPEC indicate that Iraq pumped 4.19 MMbpd in January, or 190,000 above its limit. But Iraqi Oil Minister Hayyan Abdul Ghani said on Monday that the country is producing no more than its quota of 4 MMbpd.

The excess production comes at an awkward moment for OPEC+ alliance as it seeks to balance global markets against slowing demand growth and booming supply from the Americas. Crude prices are holding near $80 a barrel, a little too low for some member governments.

“There’s a little bit of fatigue kicking in” among OPEC+ members, “particularly given a rise in production from alternative producers outside the group,” said Ayham Kamel, head of Middle East and North Africa at the Eurasia Group consultancy.

Straying from their limits isn’t an unfamiliar position for either Kazakhstan or Iraq.

Baghdad has often chafed against output quotas since the creation of OPEC+ more than seven years ago, as it seeks maximum revenues to rebuild a shattered economy. Astana meanwhile has been keen to make use of production capacity additions at oilfields like Kashagan.