Oil production from OPEC dropped to its lowest level in 2 ½ years according to a Bloomberg survey. Production dropped by 11,000 barrels per day from January to February, down to an average of 29.877 million barrels per day. OPEC’s production hasn’t been that low since June 2011.
Much of the lost production was due to a decrease in production in Saudi Arabia, as well as the ongoing political conflict in Libya and Nigeria that has forced capacity offline. Libya’s oil production dropped by 120,000 bpd in February, marking its ninth out of eleven months in which oil production dropped. Its daily output now stands at 350,000 barrels – the country has the ability to produce around 1.5 million bpd, as it did before its civil war.
Yet the numbers are always a little murky – a Reuters survey contradicts Bloomberg’s numbers, suggesting that output actually grew a bit in February, led by gains from Iraq, Angola, and Iran. Increases from these countries may have compensated for the outages in Libya and Nigeria. Iraq in particular may have increased oil production by 300,000 barrels per day, a notable increase.
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As for exports, some analysts believe that OPEC will increase its shipments of crude over the coming weeks. Oil Movements stated that it expects OPEC exports to jump by 430,000 bpd by March 15. If that is achieved it would be OPEC’s highest level of exports since 2006.
The outlook for OPEC production largely depends on the ability of its 12 members to cooperate. Iraq is seeking to rapidly increase production as it is not subject to OPEC’s quota system. Iraq’s Deputy Prime Minister Hussain al-Shahristani hinted that Iraq is considering a proposal for its inclusion in a quota system, but stated that it probably wouldn’t kick in until its output reached 4-5 million bpd. With production only around 3 million bpd, that won’t be coming anytime soon.
By James Burgess of Oilprice.com