OPEC’s oil production for the month of March was 220,000 barrels per day higher than July volumes, a Reuters survey showed on Friday.
Oil prices bristled at the news, and started to slip off August highs. At 11:44am, WTI was trading down 0.46% ($-0.32) to $69.93, with Brent falling 0.26% ($-0.20) to $77.82. Both benchmarks are still up on the month.
The prices fell despite the fact that OPEC announced it would lift production at its meeting in June 22, saying it would reduce compliance to the production cuts to 100% after months and months of overcompliance and under-production which tightened the market.
Iraq is the largest overproducer, and Saudi Arabia increased production from 10.40 million bpd in July to 10.48 million bpd in August.
OPEC is struggling to offset supply drops in Venezuela, which once again lowered production well below its quota, from 1.42 million bpd in July to 1.38 million bpd in August. Further losses are expected in Venezuela as it struggles under the weight of socialist leader Nicholas Maduro and a catastrophic economic situation causing thousands of Venezuelans to flee across the border. Venezuela’s compliance to the production cut deal is now 723%.
Iran’s underproduction, largely due to restricted exports courtesy of the upcoming US sanctions, is also weighing on OPEC’s overall figures, with its production falling from 3.70 million bpd in July to 3.55 million bpd in August. Further production cuts are expected in Iran as well as sanctions near.
Angola is also underproducing, this month falling to 1.38 million bpd in August from 1.42 million bpd in July.
OPEC’s biggest hopes in making up for lost production in Iran and Venezuela are the cartel’s biggest heavyweights, Saudi Arabia and Iraq—the latter of which is loudly chomping at the bit to increase production as OPEC has yet to determine exactly how the production increases will be divvied up between its members.
By Julianne Geiger for Oilprice.com
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