Crude oil production in the Organisation of Petroleum Exporting Countries fell by just 45,000 bpd in April, according to the cartel’s latest Monthly Oil Market Report, despite continued deep cuts by the largest producer, Saudi Arabia and continued decline in Venezuela and Iran.
According to secondary sources, Iran registered the deepest decline in production in April, by 154,000 bpd to 2.554 million bpd. Interestingly, Iraq booked the second-largest decline, at 113,000 bpd to 4.63 million bpd. Saudi Arabia produced 45,000 bpd less crude oil in April than in march, at 9.742 million bpd.
At the same time, Venezuela’s oil production decline was reversed last month, with output rising by a daily average of 28,000 bpd to 768,000 bpd. Still, this daily average production rate is a lot below what Venezuela produced last year: that average was 1.3354 million bpd.
OPEC has been doing its best to reduce production sufficiently to boost prices to a level more acceptable to the producers’ club, but uncertainty around where prices are headed for the rest of the year has remained. Despite Venezuelan and especially Iranian sanctions from the U.S., the outlook for prices has not become clearer as nobody knows for sure how much Iranian production will decline following the removal of sanction wavers at the start of this month.
Earlier in the month, unnamed sources told Reuters that lOPEC is having a hard time predicting its next steps in the production cut agreement and in general. Unforeseen events such as Russia’s temporary suspension of exports via the Druzhba pipeline following contamination are interfering with the cartel’s estimates of the most likely supply drop by the end of the year, making it harder to decide on whether to continue the cuts or start pumping more as large importers would like.
Meanwhile, prices have steadied at around US$71 for Brent and US$61 for West Texas Intermediate as the new tariff exchange between Washington and Beijing has countered the bullish effect of supply outages and sanctions.
By Irina Slav for Oilprice.com
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