OPEC output in January rose, despite declining production in Venezuela in the same month, a new Reuters report says.
Compliance to the 2016 OPEC deal remains strong, even as Nigeria and Saudi Arabia increase output. The bloc increased output by 100,000 barrels per day, compared to December. Last month's output numbers were the lowest since April of last year.
An ongoing economic crisis in Venezuela is causing output to fall and reliable customers to find new supplies. Cuba signed a deal with Algeria to increase the amount of oil products it imports from the North African country because its main supplier, Venezuela, is struggling to stay afloat.
Caracas has continued its grandstanding despite the constant stream of negative news flowing from the country. Venezuela "can easily manage" an oil production increase of 1 million bpd in 2018 to lift its production capacity to 2.472 million bpd, oil minister Manuel Quevedo told S&P Global Platts in an interview published last week. The official said Caracas could achieve this by restructuring its debts to Russia and China, attracting international investment to redevelop its shut oil fields, and incentivizing its joint venture partners to boost production at existing projects. He added that there had been recent talks with oil supermajors Shell and Total, which have minority stakes in joint ventures in Venezuela.
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The Venezuelan government's self-reported figures showed that production plunged by a massive 216,000 bpd in December, to 1.621 million bpd. The country sitting on the world's largest oil reserves saw its crude oil production drop by 649,000 bpd in 2017-a 29-percent annual plunge-and probably the worst loss of oil production in a single year in recent history.
The International Energy Agency (IEA) said in its monthly Oil Market Report last week that "Declines are accelerating in Venezuela, which posted the world's biggest unplanned output fall in 2017."
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on… More
Comments
One is that the global oil demand is so strong as to absorb production rises from OPEC. Second it means that the global oil market has not only re-balanced completely but is now, in fact, in deficit. And third it means that announcements by EIA and IEA about major increases in US shale oil production and rises in US oil inventories are fake news.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London