OPEC + oil production declined, during May (2023), by about 670 thousand barrels per day on a monthly basis, supported by the voluntary cuts announced by Saudi Arabia, Russia and a number of coalition countries last April, which raised production cuts to 3.6 million barrels per day.
A recent survey showed that OPEC and its allies began to accelerate their tightening of the oil market. The alliance’s crude oil production shrank by 670,000 barrels per day in the first month of expanded voluntary cuts in May, according to the latest S&P Global Platts survey.
OPEC+ oil production included a decrease of 440 thousand barrels per day in the production of OPEC countries, which reached 28.16 million barrels per day in May.
While the production of non-members of the Organization of the Petroleum Exporting Countries (OPEC), led by Russia, fell by 230,000 barrels per day to 13.17 million barrels per day, according to data seen by the specialized energy platform.
Voluntary production cuts
Starting in May, 9 countries in the Saudi-led OPEC+ coalition introduced voluntary cuts totaling 1.66 million barrels per day in an effort to stabilize oil markets; This raised the total production cuts by the coalition to 3.6 million barrels per day.
And the OPEC + voluntary production cuts received a new pledge, during the alliance meeting on June 4, with the announcement of the Kingdom of Saudi Arabia, the largest oil exporter in the world, an additional cut of one million barrels during the month of July, bringing its total voluntary cuts to 1.5. million barrels, and its production drops to 9 million barrels per day.
The following infographic, prepared by the specialized energy platform, shows the size of the voluntary cuts announced by a number of OPEC + countries that entered into force last May:
Russian oil production
The survey showed that Russia – the first country to implement a voluntary cut in effect from April – saw production drop by 150,000 bpd to 9.45 million bpd.
Russian oil production fell 410,000 bpd below February’s production of 9.86 million bpd, used as a baseline for the voluntary cut target of 500,000 bpd.
Moscow said it would cut production in response to European Union sanctions and a G7 cap targeting Russian crude and refined products.
Although crude exports continue to rise; Russian refineries have reduced processing operations by more than 5%, according to market sources.
Saudi oil production
The survey showed that Saudi Arabia fully implemented its announced cut of 500,000 barrels per day in May, with an average production of 10 million barrels per day.
Besides Saudi Arabia and Russia, other countries that have pledged voluntary cuts include Iraq, the UAE, Kuwait, Algeria, Kazakhstan, Oman and Gabon.
Iraq was already well short of its quota with the prolonged halt to northern exports via Turkey due to the financial and political rift between Baghdad and Ankara; Its production was stable on a monthly basis at 4.1 million barrels per day in May.
UAE production also decreased by 140,000 barrels per day, followed by Kuwait, down by 130,000 barrels per day.
oil production in Nigeria
Decreased OPEC+ oil production from several countries was partially offset by a rebound in Nigeria from 220,000 bpd to 1.40 million bpd.
Nigerian oil production in April was the lowest since November 2022, after an industrial strike by ExxonMobil’s internal trade union affected production for 10 days during the middle of the month.
Other gainers, the survey showed, were Venezuela, which imported more diluted crude to extract its extra heavy crude, and Iran, which had been exporting more.
Production is set to fall further this summer if countries with voluntary production cuts continue to cut production and Saudi Arabia sticks to its pledge to cut an additional 1 million barrels per day.
Seasonal consumption patterns usually see a rise in global oil demand as the weather warms, while many analysts expect China’s stalled recovery from the pandemic to gain strength in the second half of the year; Hence, the OPEC+ oil production restriction may limit the market supplies in the coming months.
The May cut indicates that the gap between OPEC+ production and quotas has ballooned; The collective compliance rate of the 19 members with quotas was 192.39% compared to the agreed targets under the agreement.
The total OPEC + oil production recorded about 3.353 million barrels per day, less than the quotas announced in the coalition agreement, which is the largest reduction in the history of the alliance.
The following infographic, prepared by the specialized energy platform, reviews OPEC + shares during May, after the decision to voluntarily cut production by 9 countries in the Saudi-led coalition:
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