Crude oil production from both the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC partner countries increased in August, according to Energy Information Administration (EIA) on Friday.
Non-OPEC output increased by 530,000 barrels per day (bpd) while OPEC production rose month-on-month by nearly 1 million bpd.
As global demand for petroleum liquids declined significantly in March and April due to unprecedented travel restrictions and lockdowns worldwide caused by coronavirus pandemic, global oil inventories increased at record levels, rising by an average of 5.9 million bpd in the first quarter and 7.2 million bpd in the second quarter of 2020.
As a result of lower demand and ample global oil inventories, global crude oil prices fell in March and April to record lows.
On April 15, members of OPEC and partner countries (OPEC+) agreed to reduce crude oil production in response to these market conditions. The OPEC+ agreement called for a decrease in crude oil output by a combined 9.7 million bpd in May and June, a combined decrease of 9.6 million bpd in July 2020, and a combined decrease of 7.7 million bpd in August.
Compared with January levels, OPEC+ production fell by an estimated 5.9 million bpd in May, 7.9 million bpd in June, 7.1 million bpd in July, and 5.6 million bpd in August.
OPEC crude oil production decreased by 5.7 million bpd between January and July 2020. The group posted its largest-ever production decline in May by 6 million bpd compared to April, according to US Energy Information Administration (EIA) data.
The non-OPEC partner countries reduced their production by 2.8 million bpd in July from production levels in January 2020.
-Additional cuts
Saudi Arabia, Kuwait, and the United Arab Emirates (UAE) decreased their crude oil production by an additional 1.1 million bpd from May to June, while Saudi Arabia alone contributed 77% to this decrease. Crude oil production in Saudi Arabia decreased from 9.9 million bpd in January to an 18-year low of 7.7 million bpd in June.
Crude oil production in Iraq was 0.9 million bpd lower in July compared with January. Although financial pressures fuelled by low oil revenues made production cuts difficult to implement in May, Iraq and international oil companies (IOC) that operate larger fields in southern Iraq agreed to further reduce production from 4.6 million bpd in January to 3.7 million bpd in July.
Crude oil production in Nigeria fell from 1.8 million bpd in January to 1.4 million bpd in June mainly due to the sudden outbreak of the coronavirus pandemic and planned maintenance at its oil fields.
Angola made larger cuts from May to July, reaching a crude oil production low of 1.2 million bpd in July from 1.4 million bpd in January.
-Non-OPEC cuts
Output also decreased among non-OPEC participants in line with the April 15 agreement. Crude oil and condensate production in Russia saw substantial declines from January 2020 to July, falling by about 2 million bpd. However, the country’s production increased to 9.5 million bpd in August.
Production cuts in Kazakhstan were more than 350,000 bpd from January to July 2020.
Mexico’s government also agreed to cut production to comply with the April 15 agreement, however, the country’s output declined as a result of the sustained lack of investment, the natural decline in mature fields, and logistical challenges related to COVID-19.
Iran, Libya, and Venezuela were exempt from the production cuts because of economic sanctions and/or domestic political instability in their respective countries.
By Sibel Morrow
Anadolu Agency
energy@aa.com.tr