Total OPEC production down 8.1 MBOPD
OPEC has released this month’s Monthly Oil Market Report, outlining the cartel’s assessment of the state of the international oil industry.
Total OPEC production fell slightly in January, dropping by 8.1 MBOPD to 32,302 MBOPD. This slightly offsets the increase in production reported by the group last month.
The largest increases in production were seen in Iraq, Saudi Arabia and Libya, which added a combined 74.5 MBOPD. The increase in Iraqi output, while frustrating for nations complying with cuts, are not unexpected. The country has made moves to increase its production and secure sales routes in recent months, and is now working to expand its refining capacity. Recent reports suggest Iraq is planning to build at least five new refining complexes throughout the country, with a combined capacity of 770 MBPD.
The rise in Saudi Arabian production continues a trend seen over the past few months. While the country will continue to abide by the production cuts it agreed to in 2016, it has moved away from cutting output beyond its obligations. While the kingdom made up for the halfhearted efforts of other OPEC members in most of 2017, it has gradually increased its production since December.
Venezuelan production down 20% year-over-year
Only one country saw a significant decline in production this month, Venezuela. The South American producer continues to be beset by financial and political difficulties, and production has been falling for several years. The past year, however, has seen the gradual slide turn to a freefall, with significant decreases in production in almost every month. Venezuelan oil production is now down 407 MBOPD year-over-year, which equates to a decline of 20% in a single year. This drop goes well beyond what could be expected from natural field decline, meaning output is below what could be expected if the country simply stopped drilling new wells.
Venezuelan output fell by 47.3 MBOPD in January, leaving the country at 1,600 MBOPD. This is the lowest production level since early 1989, according to Bloomberg.
Overall OPEC cut compliance improved this month, with production from members subject to the cuts down by a combined 9.5 MBOPD.
