OPEC+ missed its oil production target by more 800,000 barrels per day on average last year, missing out on billions of dollars in revenues and hurting members of the group which have struggled to raise cash to invest, data seen by Reuters showed.
Based on the average price of $70 a barrel for OPEC’s crude basket, 800,000 bpd in lost output — about half Britain’s daily consumption — equates to about $21 billion in lost earnings for the group in 2021, Reuters calculations show.
After its record output cuts in 2020, OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, has been gradually relaxing its curbs as demand recovers from the worst impact of the COVID-19 pandemic.
But not all producers have kept up with the rising output goals, especially West African producers Nigeria and Angola, which have faced outages and struggled with limited investment.
Even as others matched production targets — which have recently been rising at a rate of 400,000 bpd a month across the group — analysts say spare capacity has been whittled away.
Spare capacity, production which can switched on at short notice, is a vital cushion to protect the market from any shock, smoothing out price volatility and spikes.
“Spare capacity remains critically low, with concerns around Russia’s, Kuwait’s, and Iraq’s productive capacity likely to materialize by summer, when demand seasonally ramps up and international travel reopens,” Goldman Sachs wrote in a note.
OPEC+ is expected to stick to its previously agreed plan to raise March output by 400,000 bpd when it meets on Wednesday, although two OPEC+ sources told Reuters the surge in prices might prompt the group to consider other steps.
Benchmark Brent traded above $90 a barrel this month at a more than seven-year high. It was $88.85 at 1202 GMT, more than $20 higher than the average price in 2021.
A Reuters OPEC production survey on Tuesday found that in January the group overall had undershot the output rise it had planned by even more than in December.
