A recent survey conducted by S&P Global Commodity Insights revealed that the production of crude oil by OPEC-13 reached its lowest point since August 2021 last month.
The survey indicated that OPEC-13’s crude production in July 2023 experienced a significant decline, primarily due to Saudi Arabia’s substantial voluntary production cut taking effect. This reduction, combined with disruptions in Kazakhstan and Nigeria, outweighed the increases seen in Iran and Iraq, leading to a nearly 1 million barrel per day (bpd) decrease in overall OPEC+ output compared to the previous month.
Notably, Saudi Arabia decided to extend its crude oil production cut, which began in July, until the end of September 2023, as reported by Nairametrics last week.
The survey also highlighted that OPEC’s 13 members pumped a total of 27.34 million bpd, while Russia and eight other allies contributed an additional 13.06 million bpd, resulting in a combined output of 40.40 million bpd. This marked the group’s lowest production level since August 2021 when significant cuts were being reversed following the COVID-19 pandemic.
During the period covered by the survey, Saudi Arabia lowered its production to 9.05 million bpd, representing its lowest output since June 2021. It’s important to note that although the decline was notable, it didn’t match the extent of the pledged cut, with production falling by 940,000 bpd compared to June volumes.
Furthermore, the survey disclosed that Nigeria experienced a reduction of 100,000 bpd, reaching 1.32 million bpd, attributed to an outage at the Forcados terminal due to the discovery of a sheen at the facility in early July 2023.
S&P Global Commodity Insights also pointed out that despite the impact of Saudi Arabia’s cuts on OPEC-13 crude production, both Iran and Venezuela saw increases. Iranian production reached its highest level since December 2018, at 2.76 million bpd, while Venezuela’s crude production hit its highest level since February 2019, reaching 810,000 bpd. These rises were seen as potential indications of the United States relaxing sanctions enforcement, possibly in response to heightened pressure on Russia due to the Ukraine situation. Additionally, Venezuela benefited from looser US sanctions, leading to increased imports of diluent and subsequently boosting its heavy oil output.
It’s important to be aware that the quotas mentioned in the survey encompass voluntary extra cuts initiated by several countries, including Saudi Arabia, Russia, Algeria, Gabon, Iraq, Kazakhstan, Kuwait, Oman, and the UAE. On the other hand, OPEC members Iran, Libya, and Venezuela are exempt from these quotas.
As of Wednesday at 9:24 AM (GMT+1), the Brent crude price stood at $86.34 per barrel.
