Largest OPEC member adds another 46.5 MBOPD

OPEC released this month’s Monthly Oil Market Report, outlining the cartel’s assessment of the state of the international oil industry.

Total OPEC production rose slightly this month, though most countries reported only minor changes. The group produced a total of 31,930 MBOPD in April, up by 12.1 MBOPD from the March production level. This is a very small change for the group, which regularly reports changes of more than 50 MBOPD, and last month dropped by over 200 MBOPD.

The largest change in oil production this month came from an unexpected source, as Saudi Arabia added significant output. Oil production in the kingdom grew by 46.5 MBOPD, the largest increases seen in the country since June. However, this jump in production only slightly exceeds the drop seen last year, and from February to April the kingdom’s production only grow by 9 MBOPD. Other significant increases were seen in Algeria and Iran, which added a combined 27.7 MBOPD.

The streak is broken

OPEC cut compliance changed only slightly this month, with countries subject to the cut adding only 3.6 MBOPD. This is a minor drop compared to the volumes that the action has removed from the market, but breaks a nine-month streak of increasing cut compliance.

The only significant decrease in production was predictable, as Venezuela continued to slide. The country produced only 1,436 MBOPD, down 41.7 MBOPD from last month. This is a severe decline, but is smaller than the 53 MBOPD that came offline from March to April.

Two OPEC developments still to come

U.S. sanctions are not reflected in the most recent production data.

While the U.S. has announced its exit from the Iran nuclear deal which has triggered the resuming of sanctions, most sanctions will not begin to have an impact for several months, so the ultimate effects of the move on oil production will not be apparent for some time.

But a second major development in OPEC’s universe may be borne out in production numbers more rapidly.

ConocoPhillips’ dispute with PDVSA has imperiled significant volumes of Venezuelan production, and may have an immediate effect. Conoco is moving to seize PDVSA’s Caribbean assets, which are key to exporting Venezuela’s heavy oil production. Analysts estimate that if PDVSA loses these facilities it may cost Venezuela 500 MBOPD, or 35% of the country’s current output.

The country is already refusing to ship oil to the facilities Conoco is moving to seize, a cessation of activity that may be seen in next month’s production numbers. However, Venezuela appears willing to pay Conoco the $2 billion it is owed, which should resolve the situation and allow PDVSA to resume exporting at full volumes.

OPEC cut compliance changed only slightly this month, with countries subject to the cut adding only 3.6 MBOPD. This is a minor drop compared to the volumes that the action has removed from the market, but breaks a nine-month streak of increasing cut compliance.

Compliance Falls as Saudis Produce More Oil


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