April’s OPEC output dropped to a one-year low mostly due to significantly lower production from Venezuela and reduced exports from the cartel’s African producers, according to a Reuters’ survey. Anadarko photo.
OPEC output in April hit 32.12 million b/d, down 70,000 b/d from March
According to a survey conducted by Reuters, this month OPEC output fell to a one-year low. The drop in Venezuelan production coupled with lower exports from the cartel’s African producers mostly accounts for the decline.
According to the cartel, compliance with OPEC’s supply cut agreement hit a record high of 162 per cent in April.
Reuters reports there is no sign that Saudi Arabia or other big producers in the organization amped up their production significantly to take advantage of rising oil prices or to compensate for the drop in Venezuelan output.
Participants in the 2017 OPEC supply cut agreement initially agreed to reduce their total production by 1.8 million barrels per day (b/d). The agreement has been extended three times. At the end of last year, the cartel and other participants agreed to extend the deal to the end of 2018.
Russia and Saudi Arabia have since publicly supported prolonging the agreement indefinitely, however, last week Iran said such an extension is unnecessary.
The survey found that in April, OPEC countries pumped 32.12 million (b/d), down by 70,000 b/d since March. The OPEC output in April is the lowest since April 2017.
“Thus, higher U.S. oil production is needed to plug the supply gap,” Carsten Fritsch, analyst at Commerzbank told Reuters.
Despite rising oil prices and declining global crude stocks, OPEC maintains that the supply cut agreement should be continued.
In April, Venezuela reported the largest drop in output as production fell to a new long-term low of 1.5 million b/d this month, according to the survey.
As well, production in Angola fell due to natural declines at some oil fields. The Reuters survey reports Angola is now producing 260,000 b/d less than what it agreed to under the OPEC pact. Nigerian exports have risen this year after months of strife, however, slipped in April.
And in Libya, production continues to be unstable due to unrest and has edged lower after what many suspect is an act of sabotage at the Waha Oil Co.’s fields which briefly cut crude flows.
Nigeria and Libya were initially exempted from the agreement due to conflict and unrest and in 2018, the two African nations agreed to not increase their 2018 production beyond 2017 levels.
Saudi Arabia and Iraq both boosted their production, but not enough to offset the declines elsewhere. The kingdom’s production rose, but was still below its agreed-to rate under the OPEC supply pact. With rising exports from the south, OPEC’s second-largest producer, Iraq, also increased its output.
United Arab Emirates’ production remained steady in April and the UAE shows higher compliance with the agreement than last year. Kuwait also reported full compliance.
For 2018, OPEC has an implied production target of 32.73 million b/d. The target is based on cutbacks outlined in late 2016 and account changes of membership since then as well as Nigeria and Libya’s expected 2018 production.
OPEC produced about 610,000 b/d below this implied target in April.
The survey is based on shipping data from external sources, Thomson Reuters flows data and information provided by sources at oil companies, OPEC and consulting companies.