OPEC’s oil output fell in May from near a record high, a Reuters survey found on Tuesday, as attacks on Nigeria’s oil industry and other outages outweighed increases in Iran and Gulf members.
A rise in supply from Saudi Arabia plus Iran suggests the group’s top producers remain focused on market share, following the failure of an initiative in April between OPEC and non-OPEC producers to support prices by freezing output.
With OPEC meeting in Vienna on Thursday, outages are effectively achieving the supply restraint on which producers could not agree. Those disruptions are supporting oil prices, which are close to 2016 highs, and the rally has reduced the urgency of any new attempt at deliberate supply curtailment.
“There is a tiny chance of a bullish surprise but as things stand right now, the odds are the continuation of OPEC’s market-share policy,” said David Hufton, of oil brokers PVM.
Supply from the Organization of the Petroleum Exporting Countries fell to 32.52 million barrels per day (bpd) this month, from 32.64 million bpd in April, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants.
OPEC output has surged since the group abandoned in 2014 its historic role of cutting supply to prop up prices, in a shift led by Saudi Arabia. There are more indications, however, that some producers are struggling to maintain supply.
May’s biggest decline occurred in Nigeria due to militant attacks on the country’s oil industry. The disruption has pushed output to its lowest in more than 20 years.
Libyan output declined further due to a blockage of shipments from the port of Hariga. Loading difficulties and other problems made a further dent in Venezuela’s supply, sources in the survey said.
Iraq, the fastest source of OPEC production growth in 2015, also pumped less as power outages limited southern exports, which in April were at a near-record.
Of the countries boosting output, Iran managed a further increase after the lifting of Western sanctions in January.
At 3.55 million bpd, Iranian output has more than matched the 3.50 million bpd it pumped at the end of 2011 before sanctions were tightened, according to Reuters surveys. However, any further rises will be smaller, sources said.
“Getting back to pre-sanctions output was not a problem,” said a source familiar with Iranian thinking. “Getting beyond that will be harder.”
Saudi Arabian output edged up to 10.25 million bpd, compared with 10.15 million bpd in April, the survey found.
“Exports are higher,” said an industry source who monitors Saudi output. “But production is not really changing very much.”
Other increases came from the United Arab Emirates, following the end of maintenance on oilfields, and Kuwait as supply rebounded after a three-day workers’ strike in April cut output.
Source: ReutersPrevious Next