The Organization of the Petroleum Exporting Countries (OPEC) members’ crude output rose 270,000 barrels per day to 32.12 million barrels per day in May compared to April, according to an S&P Global Platts on June 6.
The rise was driven by sharp output recoveries in Libya and Nigeria, both of which are exempt from the organisation’s production cut agreement.
“Despite strong compliance overall so far, OPEC’s efforts have not borne much fruit, as far as oil prices are concerned,” said Eklavya Gupte, Senior Editor, Europe and Africa Oil News, S&P Global Platts. “If global stocks do not start to show demonstrative signs of steady draws, OPEC may have to be more creative with its strategy.”
“To add to this, OPEC could face a brewing political crisis as two key members have broken diplomatic ties with Qatar,” Gupte noted. “In the past, the group has managed to put aside political rivalries to focus on production management, but geopolitical risk is always something that bears watching within OPEC.”
May production rose despite very high compliance from both Saudi Arabia and Angola, as Iraqi output also rose steeply. Libya and Nigeria’s combined January-May average output of 2.312 million barrels per day is now 101,000 barrels per day higher than their October levels, the benchmark month against which the rest of OPEC members’ cuts are determined, according to the S&P Global Platts survey.
On May 25, OPEC and 10 non-OPEC partners including Russia decided to roll over a 1.8 million barrels per day production cut agreement into March 2018.
Iraq, which continues to produce above its output quota, saw its production rise by 70,000 barrels per day to 4.43 million barrels per day in May.
OPEC’s largest producer Saudi Arabia saw its production fall to 9.93 million barrels per day in May, down 40,000 barrels per day from the previous month, as survey panelists said exports were down significantly despite a rise in direct crude burn.