Smoke And Mirrors -- August 6, 2017

Updates

August 11, 2017: OPEC compliance is estimated to be 75%.

August 6, 2017: see comments. Link brought up here for easier access: https://www.platts.com/news-feature/2017/oil/opec-guide/prod_targets. 

Original Post 

If I recall correctly, and I probably don't, OPEC set "the cut" at 1.2 million bopd. [Later: I did not: the article says OPEC and non-OPEC partners agreed to cut 1.8 million bopd.]

Headline from Platts: OPEC July oil outputs hits high of 32.82 million bopd on Libya recover. OPEC is about 1 million bopd above ceiling.

Now the smoke and mirrors: Platts says "not including Libya and Nigeria, compliance among OPEC's 12 members ...remains robust at 114%, down slightly from 116% in June, based on an average of January through July output."

Compliance is 114% but yet OPEC production "hits high of 32.82 million bopd." Wow. 

If that's accurate, that the compliance rate is 114% based on a six-month average, it appears that more recent data suggests some members are increasing production. Let's see. From the linked article:

• Libya: exempt from OPEC cuts, averaged 990,000 bopd in July; up 180,000 bopd from June
• Nigeria: exempt, averaged 1.8a million bopd, up 30,000 bopd
• Saudi Arabia: averaged 10.05 million bopd in July; June data not provided
• Iraq: second largest OPEC producer; production grew to 4.48 million bopd; quota is 4.35 million
• Iran: third largest OPEC producer: production grew to 3.82 million bopd; quota is 3.80 million
• UAE: production rose to 2.89 million bopd; above its quota of 2.87 million bopd
• Ecuador: openly defied OPEC; discontinued goal to cut production; production rose to 530,000 bopd, also above its quota of 520,000 bopd

More: look again at the bottom line number -- 32.82 million bopd. Then look where that falls on the graph posted in May, 2017.  Prior to the "Saudi Surge," OPEC was producing just slightly above 30 million bopd. Now, after the surge, OPEC is producing above 32 million bodp. I assume most folks thought OPEC was going to cut below their pre-surge production. Nope, OPEC surged production to almost 34 million bopd and then agreed to a 2-million bopd cut, which would put them at 32 million bopd, or 2 million bopd above their pre-surge production.

One can see how global crude oil flows were sustained at robust levels even during the cuts with the graph at this post.

Having said that, if the numbers are accurate, Saudi Arabia is taking the brunt of the cut. The linked Platts article said Saudi's production in July was at 10.05 million bopd. If accurate, that is about what Saudi produced back in 2009. An old graphic, frequently posted: