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Oil Prices Rise On Surprise Crude Draw

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Oil Slips Despite Bullish OPEC Report

Crude oil production in OPEC inched up by a modest 30,000 bpd to 30.26 million bpd last month, a survey by S&P Global Platts suggested, after four months of steady declines.

While production in Iran declined as a result of U.S. sanctions, as did output in Angola, which is struggling to boost investment in its oil and gas industry, recoveries elsewhere propped up the total. Among the risers in the oil cartel were Nigeria, Iraq, and Libya.  Surprisingly, even production in Venezuela stabilized last month, the S&P Global Platts revealed.

The organization’s largest producer, Saudi Arabia, kept its production rate stable in April, the survey also found, at an average 9.82 million bpd. Reports from earlier this month had it that the Kingdom planned to increase its oil production in June but not exports as local demand would soak up the additional output without it affecting international prices.

Iran, however, saw an estimated 120,000-bpd drop in its production last month, to 2.57 million bpd. The reason was that many importers of Iranian crude stopped buying it in anticipation of the May 1 expiry of U.S. sanction waivers that Washington granted to eight large importers. In the coming months, analysts predict further declines in the country’s oil production as importers comply with sanctions with the possible exception of China, which has stated it will not comply with the U.S. sanctions.

In March, Goldman Sachs’s commodities chief Jeffrey Currie said the bank expected OPEC to clear the oil glut by April thanks to the OPEC+ agreement and the overcompliance of some members, notably Saudi Arabia, but also the usual suspects: Venezuela and Iran. Indeed, the cartel has been cutting deep, but rising production from the United States has curbed the positive effect of these cuts on prices even after the expiry of the sanction waivers for Iran.

By Irina Slav for Oilprice.com

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