OPEC oil production up 173,000bpd in June as output jumps
The latest monthly report released yesterday by the Organisation of Petroleum Exporting Countries (OPEC) reveals several oil producers led by Saudi Arabia pumped more crude oil in June despite agreeing to start raising output beginning July as collective oil production for the cartel rose by 173,000 barrels per day (bpd) to 32.3 million barrels Day (mbd).
After a very contentious meeting last month over crude oil prices and falling production in Venezuela and imminent U.S. sanctions on Iran, the world’s fifth-biggest oil producer; OPEC key player Saudi Arabia increased output by 405,000bpd to 10.5 million bpd in June.
Although Baghdad initially conveyed cynicism over increasing output; Iraq recorded the second biggest increase of 71,500 bpd to about 4.5 million bpd while United Arab Emirates (UAE) and Kuwait raised output by 35,100 bpd and 27,300 bpd to 2.8 million and 2.7 million respectively.
Ayodele Oni, energy partner at Bloomfield Law Field said the increase in production output could be as a result of increase in supply by OPEC members’ countries that were previously undersupplying as a result of production cut or under capacity.
“There are some countries in OPEC who have the capacity to produce more oil but as a result of the production cut they did not, however after the last OPEC meeting majority of them would have increased production which is what we are seeing now,” Oni told BusinessDay by Phone.
Nigeria, Africa largest oil producing country had a 27,300 bpd increase to 1.6 million bpd, while the cartel’s total production got a boost of 331,000 bpd from the Republic of Congo, which began reporting as OPEC’s 15th member this month.
Meanwhile, production declined in Angola as well as the two more troubled nations Libya, which has recently seen a sharp drop in output due to political infighting, and Venezuela, where the nation is grinding to a halt due to the on-going economic collapse.
OPEC, along with Russia and several other producer nations, has been limiting output since January 2017 in order to drain a crude glut that sent oil prices to 12-year lows in 2016.
Brent the benchmark for Nigeria crude oil was off 1.7 percent at $77.55 per barrel on Wednesday, as President Trump threatened to impose tariffs on $200 billion in Chinese goods and as Libya resumed oil exports. U.S. crude fell 0.6 percent to $73.65.
Also in the report, OPEC said it sees global oil demand surpassing 100 million barrels per day for the first time next year, but the group warned that trade tensions could weigh on demand.
OPEC said it expects demand to grow by 1.45 million bpd next year, if current trade disputes are solved quickly it however noted that if trade issues like those between the U.S. and Canada or the U.S. and China intensify, it could affect demand.
“Hence, if trade tensions rise further, and given other uncertainties, it could weigh on business and consumer sentiment,” OPEC said. “This may then start to negatively impact investment, capital flows and consumer spending, with a subsequent negative effect on the global oil market.”
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