OPEC members increased crude oil production in June, as the group along with some Russia-led countries agreed to increase output to compensate for supply declines in countries including Venezuela and Libya.
Total OPEC-15 crude oil production averaged 32.33 million barrels per day in June, an increase of 173,000 bpd over the previous month, according to secondary sources quoted in OEPC’s June monthly oil report.
Crude oil output increased mostly in Saudi Arabia, Iraq, Nigeria, Kuwait and UAE, while production showed declines in Libya, Venezuela and Angola. Saudi Arabia pumped 405,000 more crude bpd in June compared to May, while Libya and Venezuela saw a combined decline of about 302,000 bpd in the same period.
In late June, OPEC and Russia-led countries, part of an oil supply deal, reached a preliminary agreement to increase output by a nominal 1 million barrels per day starting July 1. The countries also agreed to conform to production targets by a 100 per cent, contrary to the recent over-compliance which led to a supply decline and Brent oil prices lifting towards $80 per barrel.
Brent has rallied from mid-2016 lows of around US$44 to hit $78 per barrel in May this year, which also triggered U.S. President Donald Trump’s call to OPEC to bring the oil price back down.
OPEC, which insists its agenda is to bring balance to the market and not control the price, is changing tactics after a year and a half of cutting oil production by 1.2 million bpd with the help of Russia in a deal that was meant to eradicate a stock overhang and bring inventories back to a five-year average.
OPEC in its June report also said it expects 2019 world economy and global oil demand forecasts to grow slightly less, while non-OPEC supply growth is projected to remain broadly steady.
“The world economy is expected to expand by 3.6% in 2019, slightly below the 2018 growth forecast of 3.8 per cent. This reflects some slowdown in the OECD economies, mainly due to the expected monetary tightening, in particular in the US, to some extent in the Euro-zone, and less so in Japan,” the report said.