OPEC increases production in August even as some members are left behind
OPEC boosted crude production last month as it continued to resume supplies interrupted during the pandemic, but some members struggled to keep up.
The Organization of the Petroleum Exporting Countries has increased production by 290,000 barrels per day, slightly more than what is stipulated in its roadmap to restore production, according to a Bloomberg survey. Saudi Arabia and Iraq were the main drivers of the increase.
Despite the gains, the group is actually pumping around 10% below its overall quota as some members – notably Angola and Nigeria – suffer from deteriorating production capacity and technical disruption.
Opec and its partners agreed on Wednesday to continue their plan to restore the unprecedented volumes they took offline when the pandemic crushed fuel demand last year.
The coalition’s gradual return of barrels to the market is keeping oil prices close to $ 70 a barrel, high enough to save their economies while largely avoiding the kind of rally that would worsen inflation.
The production of OPEC’s 13 members averaged 27.11 million barrels per day in August, according to the survey. Saudi Arabia increased 200,000 barrels per day to 9.63 million, while Iraq increased 110,000 barrels per day to 4.08 million. Both countries were roughly in line with their new, higher targets.
The survey is based on vessel tracking data, information from officials and estimates from consultants including Rystad Energy AS and JBC Energy GmbH.
Large production cuts by the Opec + coalition last April helped save the global oil industry, reversing prices after they briefly fell below zero during the collapse in demand.
As the market rallied, many market watchers expected – based on the group’s history – that Opec discipline would soon crumble and members would pump past their quotas. . The reverse seems to be happening, as some countries suffer from an accumulation of technical problems resulting from years of investment constraints.
Nigerian production fell again in August, by 90,000 barrels per day, to its lowest level in five years at 1.43 million per day. Royal Dutch Shell Plc has announced a disruption at the country’s main Forcados loading facility following signs of the leak.
Angola, which managed to keep production stable last month at 1.11 million barrels per day, is producing several hundred thousand barrels below its allowable quantity. The country is facing an exodus of foreign investment and a decline in the capacity of deep-water oil fields.
In the larger Opec + coalition, Russia also encountered production difficulties last month. Its total oil production – made up of crude and a light oil called condensate – fell about 0.5% to 10.43 million barrels per day after a fire at a Gazprom PJSC processing plant in West Siberia. , according to data from the Ministry of Energy.
OPEC + technical experts predict on Tuesday that global oil markets will remain in deficit this year even if the alliance fully implements planned monthly increases of 400,000 barrels per day.
If the hardships of members like Angola and Nigeria – or even Russia – limit the overall gain, then others with slack production capacity – like Saudi Arabia, Iraq and the United Arab Emirates – may be encouraged to fill the void.