1,488 MBOPD is 31% below 2016’s daily output

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

Total OPEC oil production fell sharply this month, with many countries reporting declines. The cartel produced 31,958 MBOPD in March, down 201.4 MBOPD from February output. This is the largest reported single month decline since the group’s output cut was first implemented in January 2017.

Venezuela diving

In a development that has become all too familiar, Venezuelan oil production declined significantly from February to March. Output dropped by 55.3 MBOPD in the month, averaging only 1,488 MBOPD in March. The Venezuelan slide, which has blossomed into a true humanitarian crisis, has shown no signs of slowing down. Production has declined steadily in 2018, falling by 46 MBOPD in January, 58 MBOPD in February and now 55 MBOPD.

According to Bloomberg, the current production rate is the second lowest seen in the country since at least 1962.

That was surpassed by a major strike by oil workers in 2002-2003 which severely cut production.

The decline has been very rapid, as the country produced an average of 2,154 MBOPD in 2016. This represents a decline of 31% in less than two years. Such a decline rate might be expected from a new unconventional well, but not the conventional production that dominates Venezuelan activity. This suggests the country is not able to keep established operations online.

Venezuelan decline – what does it compare to? It’s comparable to losing the oil output of a company the size of QEP each month

Since these production changes occur at a country level, it can be easy to lose a sense of the scale of these shifts.

Over the past three months, Venezuela has seen an average of 53 MBOPD shut down each month. This is comparable to the average 2017 oil output of QEP Resources (ticker: QEP), a $2 billion company.

When you look at all of OPEC, this month’s overall OPEC decline of 201.4 MBOPD is comparable to the average 2017 global oil production of Hess (ticker: HES).

Angola shows largest drop, UAE reflects only major growth

While Venezuela has accounted for the largest production decline since the production cut was announced, the South American producer showed only the second-largest decline this month.

The largest drop came in Angola, where output declined by 81.7 MBOPD. Other significant decreases were reported in Algeria, Libya and Saudi Arabia, which saw production decline by a combined 133.6 MBOPD.

The only significant increase came in UAE, where 44.9 MBOPD came online. However, this rise almost perfectly mirrored the drop the country experienced in February, and the Middle Eastern producer is now producing just 2 MBOPD more than it was in January.

Overall OPEC cut compliance continues to improve, as countries subject to the cut saw production decline by a combined 185.5 MBOPD.

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