OPEC’s oil production in June increased by 320,000 bpd from May to stand at 32.32 million bpd, as the cartel’s biggest producer Saudi Arabia produced close-to-record volumes, according to a monthly Reuters survey tracking oil supply to the market.
Saudi Arabia’s oil production in June surged by 700,000 bpd to 10.70 million bpd, very close to its highest-ever production of 10.72 million bpd from November 2016, a Reuters survey showed, in a clear sign that OPEC’s leader had started boosting production before the June 22 meeting and is making up for supply drops elsewhere within the cartel.
Saudi Arabia interprets the vague OPEC statement from the June meeting to ease compliance rates as implying that there will be indirectly a reallocation of quotas within the cartel. The main Saudi rival in the Middle East, Iran, strongly disagrees that OPEC members should be allowed to make up for production losses in other nations, and publicly criticized Saudi Arabia for boosting production.
According to the Reuters survey, the Saudi allies in the Gulf—the UAE and Kuwait—maintained steady production in June compared to May, so they have yet to increase production following the Saudi lead.
The collective implied production ceiling for OPEC for this year is 32.78 million bpd, so even with the higher June production, the cartel’s compliance rate is still above 100 percent—at 110 percent to be precise, down from 167 percent in May, the Reuters survey showed. Related: Saudi Arabia Won’t Bring 2 Million Bpd Online
While the Saudis were boosting production in June, production and exports dropped in Iran from high levels in April and May. Venezuela’s production continued to fall, as well as Angola’s.
Production and loadings in Libya and Nigeria were also down in June, with Libya posting the steepest decline in oil production last month after unrest returned to the Oil Crescent in mid-June.
By Tsvetana Paraskova for Oilprice.com
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