OPEC oil production dampening to four years low as a cartel tightens the market

OPEC's crude oil production fell by more than 500,000 bpd month in the month of March, to the lowest since February 2015, when Saudi Arabia followed its commitment to cut deeper than pledged and Venezuelan crisis sanctions than in previous months.

In its closely monitored monthly oil market report, OPEC said on Wednesday that its secondary sources estimates point to total OPEC-14 crude oil production on average of 30.02 million bpd in March, down by 534,000 bpd from February, and the lowest since February 2015 production of less than 30 million bpd.

OPEC's de facto leader and largest producer Saudi Arabia followed through its commitment from February to cut deeper and pump well below 1[ads1]0 million bpd. Saudi Arabia's crude oil production fell by a massive 324,000 bpd from February to stand at 9,794 million bpd in March – just as Saudi Energy Minister Khalid al-Falih had said the Kingdom would do and pump around 9.8 million bpd in March, some 500,000 bpd under the 10.311 million bpd obligation in the OPEC + agreement.

An OPEC member exempted from these production interruptions, Venezuela, unintentionally contributed to the cartel's mission to reduce global oil deliveries. Venezuela's crude oil production fell by 289,000 bpd to below 1 million bpd to 732,000 bpd in March, according to OPEC's secondary sources.

Venezuela oil industry suffered from US sanctions, continued economic crisis and massive outbreaks last month. Interestingly, Venezuela also reported that OPEC had a large decline in production to below 1 million bpd, not the typical surface production compared to last month it has made recently. Based on direct communication from the members, Venezuela's production showed a rise of 472,000 bpd from February to 960,000 bpd in March, OPEC reported. Related: Oil and gas discoveries on the rise as oil reservoirs dive in

In other cases, the cartel's second-largest producer Iraq also occurred significantly, with 126,000 bpd to 4,522 million bpd according to OPEC's secondary sources – almost in line with the OPEC + quota of 4.512 bpd.

Production in Iran, under US sanctions and except from OPEC's cuts, declined by 28,000 bpd to 2,698 million bpd, while the third member was exempt from the agreement, Libya, so its production increases by 196,000 bpd to 1,098 million bpd in March after its biggest oil field, Sharara, returned to operations last month.

Design of global oil demand in this month's report, OPEC reassessed its oil demand growth expectation to around 1.21 bpd from 1.24 bpd last month's report, saying "this is due to slower than expected economic activity against expectations a month earlier. "

By Tsvetana P araskova for

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