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OPEC crude oil production hits three-year high

By on July 2, 2015

Despite the clamour by the poorer members of the Organisation of Petroleum Exporting Countries (OPEC) for the cartel to reduce crude oil production due to the drop in prices, OPEC’s daily output climbed to a three-year high in June.

Saudi Arabia and Iraq hit record or near-record output, despite the clamour by the poorer members, as well as outages in Nigeria and Libya that reduced exports.

Riyadh and its gulf allies have opposed any reduction in OPEC’s output, so as not to lose market share to shale oil.

Due to the loading delays at the Bonny export terminal and a force majeure on exports of Forcados crude, Nigeria’s output increased by only 60,000 barrels per day.

According Reuters survey, the boost from OPEC puts output further above its target of 30 million barrels per day (bpd) and comes despite outages in the two countries.

OPEC supply has risen in June to 31.60 million bpd from a revised 31.30 million bpd in May, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants.

The group has raised output by more than 1.3 million bpd since it decided in November 2014 to defend market share rather than prices.

A final deal between world powers and Iran over Tehran’s nuclear work could add to supplies.

OPEC at a meeting on June 5 kept its policy unchanged, amid signs that the near-halving of oil prices since June 2014 was boosting demand and putting a dampener on the US shale boom.

If the total remains unrevised, June’s supply would be OPEC’s highest since it pumped 31.63 million bpd in June 2012, based on Reuters surveys.

The biggest increase in June has come from Iraq, which has helped push OPEC output higher this year.
Exports from southern Iraq have jumped to 3 million bpd after Iraq split the crude stream into two grades, Basra Heavy and Basra Light, to resolve quality issues. Some companies have increased production following the move.

Shipments from Iraq’s north via Ceyhan in Turkey have remained steady despite tensions between Baghdad and the Kurdistan Regional Government over budget payments.

The KRG, which says it has not received its share of revenues from Baghdad, has boosted independent sales and cut allocations to Iraq’s State Oil Marketing Organisation, say trade and industry sources.

Still, this does not appear to have curbed actual volumes.

Top exporter Saudi Arabia has not scaled back output from May’s record, sources in the survey said, as Riyadh meets higher demand internationally and from domestic power plants and refineries.

However, there is no sign yet of a further sizeable boost in Saudi supply, they said.

Of the countries with lower output, Libya posted a slight decline as supply remained disrupted by unrest and negotiations to reopen closed oilfields had yet to succeed.

Angola exported fewer cargoes following a strong month in May.

Kuwait’s output was reduced slightly as a result of the shutdown of the Wafra oilfield, shared by Saudi Arabia and Kuwait, sources in the survey said.

 

[ThisDay]