OPEC crude output drops but Middle East gains ground

barrel nigeria troy stoi sxc optFor 2017, OPEC revenues are projected to be US$427bn. (Image source: Troy Stoi/sxc.hu)Output from OPEC member Iran rose by 80,000 bpd to reach 3.64mn bpd in May 2016 – a level last pumped in June 2011 before the imposition of more rigorous sanctions

Iranian crude oil exports last month rose by more than 130,000 bpd to 2.1mn bpd. Supply from the UAE also climbed by 70,000 bpd after oilfields returned from scheduled maintenance. Saudi Arabia’s production edged up to 10.25mn bpd, according to US Energy Information Administration (EIA) estimates.

Meanwhile, OPEC’s overall crude output dropped by 110,000 bpd in May 2016 to 32.61mn bpd as deepening outages in Nigeria outweighed significantly higher production from Kuwait, Iran and the UAE, according to the IEA’s June monthly oil market report

Force majeure on four key export grades cut Nigerian supply by 250,000 bpd to 1.37mn bpd – the lowest in nearly three decades. Power cuts in southern Iraq reduced flows by 90,000 bpd, while a marketing dispute in Libya clipped production by 80,000 bpd.

Kuwait posted the biggest increase, with supplies rebounding by 120,000 bpd following a short-lived workers’ strike in mid-April.

For 2015, EIA added that OPEC earned about US$404bn in net oil export revenues. This represents a 46 per cent decline from the US$753bn earned in 2014, mainly as a result of a precipitous fall in average annual crude oil prices during the year, and to a lesser extent to decreases in the level of OPEC net oil exports. The 2015 revenue total was the lowest earnings for OPEC since 2004.

EIA projects that OPEC net oil export revenues could fall further to about US$341bn (unadjusted for inflation) in 2016, based on projections of global oil prices and OPEC production levels in EIA’s June 2016 Short-Term Energy Outlook (STEO).

For 2017, OPEC revenues are projected to be US$427bn, with an increase in forecast crude oil prices, coupled with higher OPEC production and exports, contributing to the rise in overall earnings.

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