Jump in OPEC Oil Production

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By USDR

Crude oil output from the Organization of the Petroleum Exporting Countries (OPEC) fell to 30.45 million barrels per day (b/d) in June from 30.57 million b/d in May, as lower volumes from Libya and Iraq more than offset an increase from top producer Saudi Arabia, a Platts survey of OPEC and oil industry officials and analysts showed Tuesday.

“What’s notable about this month’s figures is not the Libyan decline, because that was known since the start of June, but the way the Saudis stepped right in to fill that gap,” said John Kingston, Platts global director of news. “The Saudi role as swing producer becomes more significant every month, as the kingdom puts oil into the market when it’s needed, and takes it out when it’s not. It has been particularly aggressive in this role in recent months.”

Libyan production, which had recovered to around 1.4 b/d in May, plunged by 200,000 b/d in June amid continuing political unrest that has included protests at key oil fields across the country. On June 11, oil minister Abdel-Bari al-Arousi said Libyan oil output had fallen below one million b/d because of the protests and other technical issues. In mid-June, the state-owned National Oil Corporation (NOC) said there had been a “massive” decline in production at some of Libya’s major fields, among them Elephant, Sharara, Sarir and Messla. Security personnel have been protesting since June 2 at the Elephant field, which is operated by a joint venture between NOC and Italy’s Eni, demanding improved pay and conditions.

Reduced exports took Iraqi output down by around 100,000 b/d to 3 million b/d. The northern pipeline system, which carries crude to Ceyhan on the Turkish Mediterranean, has been subject to repeated attacks by insurgents. Exports from Ceyhan, suspended since mid-June, remained halted on Tuesday despite earlier reports that loadings would resume on July 4.

Other smaller dips in output came from Algeria, Angola and Nigeria. The 1.88 million b/d estimate for Nigeria was the lowest since September 2009, when production was pegged at 1.85 million b/d. Nigeria is subject to frequent sabotage of oil installations and pipelines and is also seeing U.S. export market shrink dramatically.

Nigeria’s Bonny Light crude has been under force majeure since mid-April, when Shell shut in 150,000 b/d of production to repair a major pipeline reported to be damaged by thieves. And while production of Total’s offshore Usan crude restarted in late June, almost a month after it was stopped for unspecified reasons, the grade remains under force majeure. Usan normally produces between 90,000 b/d and 110,000 b/d.

OPEC kingpin Saudi Arabia boosted output by 250,000 b/d to 9.65 million b/d, the highest volume since November 2012 when output was estimated at 9.82 million b/d, the survey showed. Saudi output typically climbs in summer to meet increased demand from domestic power stations for direct-burning crude. Saudi production was estimated at an average 10 million b/d during May, June, July and August last year.

There were smaller increases of 10,000 b/d each from Kuwait and the United Arab Emirates.

The latest survey indicates OPEC is overproducing its official 30-million-barrels-per-day ceiling, which has been in place since January 2012, by 450,000 b/d. Adherence to the ceiling, however, is informal as OPEC has not set individual country quotas. This effectively leaves the management of the market to Saudi Arabia, the only country with the ability to make significant adjustments to output.

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Darshan Shah

Darshan Shah is a young entrepreneur, digital marketer and blogger. He’s founder of <a href="https://TheWebReach.com">TheWebReach.com</a> and provides Digital Marketing services like SEO, <b><a href="https://TheWebReach.com">Guest Posting</a></b>, Inbound Marketing and many more. He loves to help people to grow their business worldwide through his digital marketing knowledge.  He’s enthusiastic about creating blogs and writes creative content for the readers.
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