Crude oil production from the Organisation of Petroleum Exporting Countries rose in January from an eight-month low as higher output from Nigeria and Saudi Arabia offset a further decline in Venezuela and strong compliance with a supply reduction pact.
A Reuters survey found on Tuesday that OPEC had pumped 32.4 million barrels per day in January, up 100,000 bpd from December. Last month’s total was revised down by 110,000 bpd to the lowest since April 2017.
Even so, adherence by producers included in the deal to curb supply rose to 138 per cent from 137 per cent in December, the survey found, suggesting commitment was not wavering even as oil prices hit their highest level since 2014.
OPEC is reducing output by about 1.2 million bpd as part of a deal with Russia and other non-OPEC producers. The pact will run until the end of 2018.
In January, the biggest increase in supply came from Nigeria, where some shipments originally planned for export in December slipped into January, according to loading programmes and tanker data.
Top exporter, Saudi Arabia, boosted output by 50,000 bpd, according to sources in the survey, who cited higher exports for much of January. Supply remains below the kingdom’s OPEC target.
Output in Libya edged higher by 30,000 bpd. The country restored some production that had been shut in by a blockade since November.
Both Nigeria and Libya were originally exempt from cutting supply because output was curbed already by conflict and unrest. For 2018, both countries told OPEC that output would not exceed 2017 levels, ministers and delegates said.
For a second month, the survey shows no sign of big OPEC producers boosting output significantly to cash in on rallying prices or to replace a decline in Venezuela, where output is dropping amid an economic crisis.
OPEC’s cut has boosted oil prices, which last week topped $71 per barrel for the first time since 2014. OPEC members are enjoying the extra income, though some in the group have expressed concern that it could encourage US shale and other supply from outside producers.
“Surely an orderly recovery of prices is more preferable. The history shows sudden price rises are not helpful to oil exporters in the long run,” an OPEC delegate said.
Among countries with lower output, the largest drop was in Iraq. The country exported almost 3.5 million bpd from the south, the outlet for most of its crude, in a slight decline from December’s record high.
Output in northern Iraq is still down after falling in mid-October when Iraqi forces retook control of oilfields from Kurdish fighters who had been there since 2014. This has had the side effect of boosting Iraqi compliance with the OPEC deal.
Production in Venezuela, where the oil industry is starved of funds because of a cash crunch, has fallen further, the survey found. Exports rose in January, probably because of lower refinery operations, sources in the survey said.
OPEC has an implied production target for 2018 of 32.6 million bpd, based on cutbacks detailed in late 2016 and taking into account changes of membership since and Nigeria and Libya’s expectations on their 2018 output.
According to the survey, OPEC has pumped 200,000 bpd below this implied target in January – not least because of the involuntary decline in Venezuela.
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.
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from PUNCH.