Iran Takes Market Share From OPEC And Others "Not Fully Complying" With Oil Cut Deal

Although observers on Thursday praised the Organization of Petroleum Exporting Countries (OPEC) for achieving a 91 percent oil cutback compliance rate (above earlier reports of 82 percent compliance, which in itself was far better than expected), further signs that many cartel members are bent solely on pumping full out came with the revelation that the compliance rate is not being spread evenly.

S&P Global Platts, which monitors OPEC production and pegged its compliance at 91 percent (or a reduction of 1.14 million barrels per day for January), noted that Saudi Arabia, Kuwait, and Angola are over complying to compensate under complying members (the former to the tune of 9.98 million bpd in January, below its 10.06 million bpd allotment).

Meanwhile, Platts singled out Algeria, Venezuela, and Iraq as taking advantage of rather than contributing fairly to the cutbacks, with the latter pumping 4.48 million bpd last month compared to its 4.35 million bpd allotment.

Herman Wang, OPEC specialist at S&P Global Platts, told CNBC that while the Saudis are doing the most to make the cutback agreement a success, "how long Saudi Arabia is willing to shoulder the burden of these cuts if it proves some of their cohorts are not fully complying with the deal remains to be seen."

It also remains to be seen how long rivals will put up with Iran's incessant claw back of its pre sanctions production volume: Platts reports that the Islamic republic's crude oil and condensate exports rose 3 percent month on month in January.

Platts stated that Iran is the only Middle Eastern producer to enjoy rising exports in January, with total estimated export volume on Aframaxes, Suezmaxes, and VLCCs from Iranian ports climbing to 2.162 million bpd in January compared to 2.102 million bpd in December.

Moreover, Iran's output in January rose to 3.72 million bpd, up 30,000 bpd from December.

Platts noted that "Unlike its peers under the landmark OPEC-led agreement, Iran has wiggle room to boost production to 3.80 million bpd" and seems intent on doing so.

Even though the generous Wang during his CNBC appearance gave OPEC an a-minus for effort, the sense of reluctant members straining at the bit to exceed their allotments combined with rampant output from Iran gives further credence to the argument that once the cutback deal expires in January, it will be full out production once again - and that current production from renegade nations is enough to ruin any gains made by OPEC.

Indeed, that is the contention of many critics, who in January warned that in addition to Iran, Libya has restored its production capabilities and is headed towards its goal of pumping 900,000 bpd in the next few months.