LONDON, July 11, 2016 /PRNewswire/ — Oil production from the Organization of the Petroleum Exporting Countries (OPEC) crude oil output surged 300,000 barrels per day (b/d) in June, close to an eight-year high of 32.73 million b/d, as production in Nigeria and Libya tentatively recovered along with steady increases for Saudi Arabia and Iran, according to an S&P Global Platts survey of OPEC and oil industry officials.
- OPEC crude production climbs by 300,000 b/d
- 150,000 b/d recovery on return of Nigeria’s Qua Iboe
- Venezuelan output sinks to 13-year lows
Venezuela acted as a check on the overall level though, as the crisis-hit country’s production continues to hit fresh lows.
The bloc’s top producer, Saudi Arabia, increased its output further to produce an average 10.33 million b/d in June in order to meet domestic demand.
Last summer, Saudi Arabia produced as much as 10.45 million b/d.
A spike in air-conditioning demand has traditionally boosted the volume of crude burned directly in the kingdom’s power plants during the summer months. In addition, domestic refining also picked up.
The sharp increase in OPEC’s June production affirms a continuation of its market share strategy.
Meanwhile, OPEC added a new member in July, Gabon, and next month Nigeria’s Mohammed Barkindo will take over as the group’s secretary general.
This comes at a critical juncture for OPEC, after a spate of infighting and disagreements. Analysts said these two decisions which were taken at the June meeting could lay the groundwork for future cooperation on bigger issues.
NIGERIAN OUTPUT REBOUNDS
The largest rise in output came from Nigeria, where production rose 150,000 b/d to 1.57 million b/d, due largely to the return of its largest export grade, Qua Iboe, as production and exports resumed at the end of May.
Nigerian production hit 30-year lows in May as militancy continued in the country’s oil rich Niger Delta.
The situation remains volatile. Barely 10 days after a 30-day ceasefire deal with the Nigerian government, militants claimed a round of fresh attacks in the Niger Delta at the start of July, marking a major setback after weeks of respite.
Libyan oil production rose 60,000 b/d to 310,000 b/d in June as exports from the eastern port of Marsa el-Hariga resumed in late May after a three-week blockade caused by a dispute between the country’s two rival national oil company factions.
The North African country’s production remains less than a quarter of its 1.6 million b/d production capacity, but in early July Libya’s National Oil Corp. (NOC) agreed to unify its rival administrations under one management structure, a positive step for the country’s beleaguered oil sector.
Analysts, however, said production could only see a sustained increase if the new national unity government unites with several other factions to reopen the country’s two largest oil terminals — the 340,000 b/d Es-Sider and 220,000 b/d Ras Lanuf facilities.
IRAN CLAWS BACK MARKET SHARE
Iranian output in June climbed to 3.63 million b/d, its highest since June 2011, and very close to pre-sanctions levels, according to Platts OPEC survey data.
Iran’s oil output rise has been swift since sanctions were lifted on January 16, increasing 740,000 b/d compared with December 2015.
The Persian Gulf producer has been reclaiming its market share and broadening its customer base.
Polish refiner Grupa Lotos bought a one-off test purchase of 2 million barrels of Iranian light crude recently, and Europe has returned as a key destination for Iranian crude.
Iran has also been gradually increasing its exports to key Asian buyers like India, China, Japan and South Korea.
Japan’s oil imports from Iran are currently more than 300,000 b/d –similar to pre-sanctions levels.
VENEZUELA OUTPUT PLUMMETS
The decline in Venezuelan crude output accelerated further, with production falling 120,000 b/d in June to 2.15 million b/d, the lowest since February 2003, S&P Global Platts data showed.
An internal state-owned PDVSA report seen by S&P Global Platts also showed a steep fall in oil output.
The fall has been attributed to a lack of investment, high costs, accumulated debts with oil field service providers, reduced drilling activity and the deterioration of physical infrastructure at extra heavy crude upgraders.
Analysts also said Venezuela’s oil sector continues to see power rationing, which is exacerbating the output decline.
There seems little hope of a recovery in Venezuelan crude production any time soon, analysts added.
The other country to observe a fall in production was Iraq, as output dropped 20,000 b/d to 4.23 million b/d, due to a fall in its southern exports.
OPEC will hold its next ministerial meeting on November 30 in Vienna.
For output numbers by country, click on this S&P Global Platts OPEC Production Table. You may be prompted for a cost-free, one-time-only log-in registration.
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SOURCE S&P Global Platts