Not only did OPEC not lift its production as agreed for the month of May, its production actually decreased, according to OPEC’s latest Monthly Oil Market Report released on Tuesday.
Meanwhile, the group stressed that oil demand could be stymied by Russia’s invasion of Ukraine. That point, however, did little to assuage the market’s fear that OPEC’s spare capacity has been overstated, with Saudi Arabia and the UAE the only members that have any room to increase production. That extra production from The Kingdom and the Emirates, however, has been offset by an even greater decline in production from Iraq, Libya, and Nigeria.
OPEC produced a total of 28.508 million bpd in May—down 176,000 bpd from April 2022. The reason for the decline are decreases in production in Equatorial Guinea (-2,000 bpd), Venezuela (-2,000 bpd), Iran (-20,000 bpd), Iraq (-21,000 bpd), Gabon (-32,000 bpd), Nigeria (-45,000), and most notably—Libya (-186,000 bpd), according to OPEC’s secondary sources.
Saudi Arabia’s directly reported production was 10.538 million bpd.
These losses were partially—but not completely—offset by gains in Saudi Arabia, which increased production by 60,000 bpd, reaching an average of 10.424 million bpd; the UAE, which saw an increase of 31,000 bpd, and Kuwait, which saw a 27,000 bpd increase.
For the 10 OPEC members that had assigned quotas for May 2022 totaling 25.589 (which exclude Iran, Venezuela, and Libya), May’s actual OPEC member production was 24.541—a 1.048 million bpd shortfall from OPEC’s stated allowances.
The market reacted to the data with a rebound in oil prices. At 9:14 am ET, WTI had risen 1.27% to $122.50, while Brent crude had risen 1.33% to $123.90 per barrel.
By Julianne Geiger for Oilprice.com
