OPEC Oil Output Declines in July as Saudi Arabia Implements Additional Cut and Nigerian Supply Is Affected
OPEC oil output has witnessed a decline in the month of July, mainly due to Saudi Arabia’s decision to implement an additional voluntary cut as part of the OPEC+ producer group’s latest agreement to support the market. In addition to this, an outage has also curbed Nigerian supply. These developments were revealed in a recent survey conducted by Reuters.
According to the survey, OPEC’s oil production averaged 27.34 million barrels per day (bpd) in July, which is a decrease of 840,000 bpd compared to June. This marks the lowest output level since September 2021, according to previous Reuters surveys.
Saudi Arabia, the leading OPEC member, pledged to cut its output by 1 million bpd in July as part of the OPEC+ deal that was agreed upon in June to limit supply until 2024. As a result of this decision, oil prices have witnessed an upward trend, with Brent crude currently trading above $85 per barrel. This is a significant increase from the price of around $71 per barrel at the end of June.
The additional voluntary production cut implemented by Saudi Arabia, referred to by Energy Minister Prince Abdulaziz bin Salman as a Saudi lollipop, comes on top of previous cuts announced by Riyadh and other OPEC+ members. These reductions build upon the cuts agreed upon under a late 2022 OPEC+ agreement.
However, the decline in OPEC’s output in July was somewhat limited by increases in exports from Angola and Iraq. These countries witnessed higher exports, which helped offset the overall decrease in production.
Despite the reduction in output, OPEC’s oil production is still falling short of the targeted amount by nearly 1 million bpd, primarily due to Nigeria and Angola lacking the capacity to pump as much as their agreed-upon levels.
The survey found that Saudi Arabia lowered its output by 860,000 bpd month-on-month, with data from Kpler showing a decline of over 600,000 bpd in crude exports. However, another tanker tracker reported a smaller decline in exports.
On the supplier side, Nigeria saw the second-largest decline in output due to Shell suspending loadings of Forcados crude as a result of a potential leak at the export terminal. Additionally, Libyan output decreased slightly due to a temporary stoppage at some fields caused by a protest.
It is worth noting that the Reuters survey aims to track supply to the market and relies on shipping data from external sources, as well as information from companies that monitor flows such as Petro-Logistics and Kpler, in addition to input from sources at oil firms, OPEC, and consultants.
In conclusion, OPEC’s oil output witnessed a decline in July, with significant reductions in Saudi Arabia’s output and disruptions in Nigerian supply. These developments, along with increased exports from Angola and Iraq, contributed to the overall decrease in production. The survey results highlight the ongoing efforts by OPEC and its allies to support the market by implementing voluntary cuts and limiting supply.
