OPEC oil output fell to a 13-month low in May due to Nigerian outages, declining Venezuelan production and strong compliance with a supply-cutting deal, a Reuters survey found.
The Organization of the Petroleum Exporting Countries pumped 32.00 million barrels per day in May, the survey found, down 70,000 bpd from April’s revised figure. The May total is the lowest since April 2017, according to Reuters surveys.
OPEC is reducing output by about 1.2 million bpd as part of a deal with Russia and other non-OPEC producers to get rid of excess supply. The deal began in January 2017 and, in theory, runs until the end of 2018.
With the supply glut largely cleared and oil topping $80 a barrel this month for the first time since 2014, OPEC and Russia are now shifting policy and discussing pumping more, although analysts expect any boost to be cautious.
For now though, adherence by producers in the deal to agreed levels remains strong. Compliance slipped to 163 percent of agreed cuts in May from 166 percent in April, the survey found, meaning they are still cutting far more than agreed.
The biggest decrease in supply came from Nigeria due to unplanned outages. Royal Dutch Shell’s Nigerian venture declared force majeure on Bonny Light crude exports, while loadings of another crude, Forcados, are facing delays.
The second-biggest decline came from Venezuela, where the oil industry is starved of funds because of economic crisis. Output dropped to 1.45 million bpd in May, the survey found, a new long-term low.
Production in Libya, which remains unstable due to unrest, edged lower because AGOCO, an eastern Libyan producer, had to curb output as unusually hot weather led to power problems.
Iranian output, expected to decline as the U.S. re-imposition of sanctions discourages companies from buying the country’s oil, edged lower in May but there was no evidence yet of a sizeable drop, sources in the survey said.
OPEC’s two largest producers, Saudi Arabia and Iraq, both pumped slightly more in May but not enough to offset the declines elsewhere.
Nigeria and Libya were originally exempt from cutting supply because their output had been curbed by conflict and unrest. For 2018, both told OPEC that output would not exceed 2017 levels.
OPEC has an implied production target for 2018 of 32.73 million bpd, based on cutbacks detailed in late 2016 and taking into account changes of membership since, plus Nigeria and Libya’s expectations of 2018 output.
According to the survey, OPEC pumped about 730,000 bpd below this implied target in May, not least because of the decline in Venezuela and a similar involuntary drop in Angola, where the survey found output was flat in May.
The Reuters survey is based on shipping data provided by external sources, Thomson Reuters flows data and information provided by sources at oil companies, OPEC and consulting firms.