OPEC oil production in May highest since end 2012

Yellow oil drums for web-Ulrich Mueller shutterstockOil production from Organization of the Petroleum Exporting Countries (OPEC) totalled 31.11mn bpd in May 2015, up 180,000 bpd from April and is the group’s highest monthly volume since October 2012, according to latest Platts survey

Margaret McQuaile, senior correspondent at Platts, said, “OPEC’s communique after the 5 June meeting mentioned that members had been urged to adhere to its production ceiling. That’s something of a tall order, given that there are no quotas and that the 30mn bpd ceiling is supposed to cover production from Iraq, which hasn’t been part of OPEC’s production management system for years. With market share now pretty much the main theme – for the bigger players, at least – it seems likely that, for the time being, the only cuts in output will be involuntary ones.”

Saudi Arabia led the rise with a 150,000 bpd increase to 10.25mn bpd, while Angola and Iraq boosted output by 70,000 bpd and 50,000 bpd, respectively. Smaller increments came from Angola, Algeria, the UAE and Venezuela.

The extra volumes, which totalled 340,000 bpd, were partly offset by a 90,000 bpd-drop in Libyan production to 430,000 bpd and smaller dips in Iran, Kuwait, Nigeria and Qatar.

Saudi Arabia reportedly looks set to keep output high in the near term. Saudi Arabia’s oil minister Ali Naimi said that the country’s market share policy was working, with oil demand picking up and supply slowing. However, he said, although world oil markets are stabilising a rebalancing will take time.

Despite ongoing political and infrastructural challenges, Iraq has continued to push out more oil, partly thanks to higher output from the south and partly to a deal with semi-autonomous Kurdistan late last year that has enabled Baghdad to resume exports from Turkish Mediterranean port Ceyhan via the Kurdistan Regional Government’s pipeline system.

Output from the Wafra field in the Neutral Zone between Saudi Arabia and Kuwait remains shut after a maintenance programme that operator Chevron said, on May 11, would take two weeks. Another Neutral Zone field — Khafji — has been shut in since October 2014. Kuwait earlier said that the field had been shut by Saudi Arabia for ‘technical reasons,’ but analysts said that they believed Riyadh’s decision to close Khafji signaled deeper problems between the two countries.

Libyan production continues to be defined by large ups and downs as the country’s situation remains mired in political chaos. After several months of increases, Libyan production went back into reverse with a 90,000 bpd drop to 430,000 bpd.
The May estimate leaves OPEC pumping more than one million bpd in excess of the 30mn bpd ceiling and some 1.8mn bpd above the 29.3mn bpd that OPEC sees as the call on its crude this year.

In a regular monthly report dated June 2015, OPEC said that it expected the current oversupply on world oil markets to ease in the months ahead, with world oil demand picking up pace in the second half of the year and non-OPEC supply showing a decline.

Non-OPEC oil is projected to slip from roughly 57.4mn bpd in the first half of 2015 to 56.82mn bpd in Q3 2015 and 56.97mn bpd in the Q4, attributed to low oil price expectations, declining numbers of active rigs in North America and insufficient investment in upstream projects.

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