Small drop in OPEC production

Oil production from OPEC dipped by 30,000 b/d in June to 29.94mn b/d, according to the latest (12 July) Platts survey of OPEC and oil industry officials and analysts. The survey showed Iraq’s output plunge of 160,000 b/d was largely offset by production increases from several other OPEC member countries.

 

‘Small though it may be, a dip in OPEC output is the last thing the consuming world wants to see,’ said John Kingston, Platts Global Director of News. ‘OPEC itself sees the call on its crude averaging 30.4mn b/d in the second half of this year, so any drop in production from the organisation – even an involuntary one – could be viewed as a move in the wrong direction.’

 

The 40,000 b/d boost from Libya in June marked the first increase since the beginning of the year, when output was estimated to have risen to 530,000 b/d in January from 250,000 b/d in December. Libyan production declined steadily in recent months as the stalemate between the authorities in Tripoli and the protesters occupying oil facilities and blockading ports continued.

 

 

However, given the continuing political turmoil and the likely constraints on production as a result of fields having been shut in for long periods, industry sources and analysts are far from optimistic that Libya will be able to restore output to the 1.4mn b/d level achieved during the early part of 2013 any time soon.

 

Iraq’s southern production and export facilities were not been affected by the jihadist onslaught across the northern part of the country in June that put paid to any hopes Baghdad might have had of resuming exports of Kirkuk crude via the Iraq-Turkey pipeline to Ceyhan. Northern exports, which averaged 293,000 b/d in February, have been suspended since sabotage closed the pipeline in early March.

 

Baghdad is now entirely reliant on the southern system, which has been blighted by a number of technological problems, not least of which are pumping constraints that are limiting the volume of crude available for export to around 2.5 mn b/d.

 

Saudi Arabia’s output of 9.78mn b/d was highest the kingdom has produced so far this year.

 

Nigeria’s oil production rose to 1.98mn b/d, the highest since March 2014, but the outlook remains uncertain as spills largely due to crude oil theft and unrest continue in the Niger Delta.

 

OPEC issued its first forecasts for 2015 in early July, saying that increased world oil demand would be met entirely by non-OPEC producers and that the call on OPEC oil would drop by 300,000 b/d to 29.4mn b/d from 29.7mn b/d in the current year. During the second half of this year, however, OPEC expects demand for its crude to average around 30.4mn b/d.