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The members of the OPEC+ group saw their collective oil production slump to the lowest level in nearly two years in July after Saudi Arabia began its unilateral output cut of 1 million barrels per day (bpd), the Platts survey by S&P Global Commodity Insights showed on Wednesday.
OPEC’s oil production from all 13 members stood at 27.34 million bpd in July, down by 890,000 bpd compared to June. The non-OPEC allies saw their output at 13.06 million bpd, basically flat month on month, as Russian output remained almost unchanged, according to the survey. The July production of OPEC+, at 40.40 million bpd, was down by 940,000 bpd compared to June.
Last month’s output of the alliance was the lowest since August 2021, the Platts survey found.
Due to the voluntary unilateral cut, Saudi Arabia’s crude oil production fell to 9.05 million bpd, the lowest level since June 2021, and falling below Russia’s production, according to the survey.
Higher production in Iran and Venezuela, both under sanctions, slightly offset the cuts from Saudi Arabia. Iran and Venezuela, however, are not part of the OPEC+ deal for production cuts due to the sanctions constraining their output and exports.
OPEC’s crude oil production alone fell in July by the largest amount in years, according to the monthly Bloomberg survey from last week. OPEC’s crude production fell by 900,000 bpd last month, to an average of 27.79 million bpd. It is the sharpest drop since 2020 when the group rushed to cut its output in the wake of Covid lockdowns and crashing demand.
Crude oil production at OPEC and OPEC+ are expected to remain low for at least this month and next, as Saudi Arabia last week extended its 1-million-bpd cut into September, adding that the reduction could be extended or extended and deepened.
Russia, for its part, will cut oil exports by 300,000 bpd in September, after a 500,000-bpd export reduction pledged for August.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com