According to data released by the S&P Global Platts Survey, OPEC, world’s biggest oil cartel, pumped its fewest barrels of crude oil in over 5 years (Apr 2014 – 29.70mb/d).
OPEC oil output slumped by 210,000 b/d to 29.88mb/d in the month of July from 30.09mb/d in June, on the back of continued production cuts from the cartel’s leading producer, Saudi Arabia. Saudi’s oil production in July dipped from 150,000b/d to 9.70mb/d maintaining a 5-month streak of keeping oil production below 10.00mb/d. The cartel’s output decline was further supported by production drop in Iran, Nigeria, Venezuela and Libya.
The decline in oil production comes in a summer month when oil production is usually higher. However, with sentiments concerning oil price weak, Saudi’s Oil Minister has restated the kingdom’s desire to maintain production below 10.0mb/d.
The decline in Iran remains linked to US sanctions which saw its oil production dip by 50,000b/d in July to 2.30mb/d, a level last seen in 1988. Meanwhile, Venezuela saw output dip by 30,000b/d to 730,000b/d in July on the back of sustained blackouts in oil installations across the country while Nigeria saw output shrink by 40,000b/d.
In terms of compliance with the 1.20mb/d extended cut deal agreed in July, OPEC compliance rose to 117% in July on the back of over-compliance from Saudi Arabia whose desire to keep the oil market balanced remains relentless. Angola, Kuwait, Algeria and the UAE were the other members whose production levels remained below their agreed quota. Despite the cuts in production, the oil price has continued to slide, declining 11.0% since the last OPEC meeting.