Hedge Fund Bison Interests tweeted this week about reports on OPEC production output which show that the Cartel members are missing their production targets. According to the reports, only Gabon and South Sudan have met their quotas.

Bison Interests tweeted, “OPEC+ missed their #oil output target even more in May. Short thread with charts. This was the worst month for OPEC+ since we started sharing comments on this. Highlights (all in MM bbl/d). Total production for OPEC+ countries (excluding the OPEC exempt) was 37.60, falling short of the 40.37 quota by 2.77 MM bbl/d… OPEC+ countries (excluding the exempt) missed their production quotas, the highest number of misses ever since we started sharing comments on this.”

Meanwhile Russian production was up materially for the time being.

According to a CNBC report their analysts said, “The alliance on [June 2] said they would increase production by 648,000 barrels per day in July and August to bring output cuts to an end earlier than previously agreed. OPEC and its allies decided to take nearly 10 million barrels off the oil market in 2020 when Covid first hit and demand evaporated. OPEC+ has “kind of broken down,” the lead analyst of an oil research firm said after oil prices rose despite the alliance announcing that it would increase supply more quickly.”

Paul Sankey of Sankey Research said, “The whole system of OPEC has kind of broken down right now. Saudi has to make a choice — do we let the price go higher while maintaining a super emergency, super crisis level of spare capacity? Or do we add oil into the market and go to effectively almost zero spare capacity, and then what happens if Libya goes down?”

Coming on the heels of a May inflation report showing that inflation was already accelerating beyond expectations, these reports will fuel fears that the Fed will find their previous 75 basis point rate hike was not near enough to tame inflation, there will be more surprise inflation reports coming in the future, and the risk of recession will grow larger.