“Iran and Iraq remain the big swing factors, having driven OPEC output higher in March, while Saudi Arabia has been more neutral, keeping production steady since January,” said Eklavya Gupte, Platts senior editor. “Neither Iran nor Iraq has made firm commitments to the Doha talks on April 17, but their collective stance could be a decisive element regarding any agreement over a production freeze.”
The drop in March oil production volumes from United Arab Emirates (UAE), Libya, Nigeria and Venezuela was offset by a rise in output from Iran, which accounted for the single largest increase within OPEC, followed by smaller increases observed in Iraq and Angola.
Iran’s output in March climbed by 110,000 b/d from the previous month to 3.23 million b/d. Its production is up 340,000 b/d since December, as it seeks to regain its former share of the global oil market. The rise is less dramatic than the country’s leaders had predicted, but it is still a notable increase as former buyers return to the market.
The demand for Iranian crude has jumped, particularly from Indian and South Korean refiners. France’s Total, Spain’s Cepsa and Russia’s Lukoil have noticeably returned as customers, having emerged since the West lifted sanctions against Iran on January 16.
Even more Iranian crude is expected to flow this month to Europe, buoyed by an increase in the level of reinsurance coverage for shipments of Iranian crude oil. European banks are gradually showing more confidence in financing Iranian crude transactions.
Iran has said it is targeting production of 4 million b/d in the new Iranian year, which started March 20.
In Iraq, oil output rose 30,000 b/d to 4.16 million b/d in March, largely on the back of a substantial rise in exports from the country’s southern terminals. However, the increase in southern-terminal oil exports was blunted somewhat by a decline in total volumes from the semi-autonomous Kurdistan Region, where vandalism and attacks continued to disrupt exports via the pipeline which transports crude from northern Iraq and Iraqi-Kurdistan to the Turkish Mediterranean port of Ceyhan.
Similarly, Angolan output in March was also up by 30,000 b/d to 1.80 million b/d, the highest production seen since December.
OPEC’s largest producer, Saudi Arabia, maintained output at 10.20 million b/d for the third consecutive month, the survey showed.
All eyes will now be on April 17 when major oil producers from both OPEC and non-OPEC countries will meet in Doha to discuss freezing oil production at January levels.
Presently, 13 countries have confirmed their participation: Algeria, Azerbaijan, Bahrain, Ecuador, Indonesia, Kuwait, Nigeria, Oman, Qatar, Russia, Saudi Arabia, Venezuela and the UAE.
Iraq and Iran have not shown any firm commitment to the output freeze proposal, while Libya — whose production remains crippled by political unrest — has said it will not join the meeting.
The plan to freeze production at January levels was initially voiced by top world producers Saudi Arabia and Russia, as well as OPEC members Venezuela and Qatar, in mid-February, in order to help balance oil markets and support oil prices.
OUTAGES, POWER SHORTAGES
The largest fall in monthly output was posted by the UAE, where production slipped from 2.85 million b/d to 2.80 million b/d. The decline occurred on the back of ongoing partial planned field maintenance at the Murban field, according to participants in the survey. Murban field maintenance is expected to be completed by mid-April, they said.
Nigerian production fell 20,000 b/d from the previous month to 1.75 million b/d, as exports and production of popular crude grade Forcados continued to be shut in due to a sabotage-related spill on the subsea Forcados pipeline. Nigeria has recently seen a rise in militant attacks in its main oil-producing region, the Niger Delta, denting oil production.
Libya and Venezuela also posted declines in March production caused by power shortages.
Venezuela’s already troubled oil and gas sector continued to face more difficulties due to power rationing in the country. Oil production in March fell 20,000 b/d from the previous month.
Libyan production in March averaged 320,000 b/d, down 40,000 b/d because of power shortages and technical problems.
For output numbers by country, click on this Platts OPEC Production Table. You may be prompted for a cost-free, one-time-only log-in registration.
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