…As Nigeria’s output rebounds
with agency reports
12 July 2016, Sweetcrude, Abuja – Oil production from the Organization of the Petroleum Exporting Countries (OPEC) crude oil output surged 300,000 barrels per day (b/d) in June, close to an eight-year high of 32.73 million b/d, as production in Nigeria and Libya tentatively recovered along with steady increases for Saudi Arabia and Iran.
The largest rise in output came from Nigeria, where production rose 150,000 b/d to 1.57 million b/d, due largely to the return of its largest export grade, Qua Iboe, as production and exports resumed at the end of May, according to an S&P Global Platts survey of OPEC and oil industry officials.
Nigerian production hit 30-year lows in May as militancy continued in the country’s oil -rich Niger Delta.
The situation remains volatile. Barely 10 days after a 30-day ceasefire deal with the Nigerian government, militants claimed a round of fresh attacks in the Niger Delta at the start of July, marking a major setback after weeks of respite.
“OPEC’s 300,000-barrel-per-day output rise in June, boosted by fragile recoveries in Libya and Nigeria, and the unrelenting rise in Iran and the increase in Saudi Arabia, sends a strong message over its unwavering market share strategy,” says Eklavya Gupte, senior editor for S&P Global Platts.
He added that “If the situation persists, the case for a return to some kind of production cap may gain traction.”
Venezuela acted as a check on the overall, though, as the crisis-hit country’s production continues to hit fresh lows.
The bloc’s top producer, Saudi Arabia, increased its output further to produce an average 10.33 million b/d in June in order to meet domestic demand.
Last summer, Saudi Arabia produced as much as 10.45 million b/d.
A spike in air-conditioning demand has traditionally boosted the volume of crude burned directly in the kingdom’s power plants during the summer months. In addition, domestic refining also picked up.
The sharp increase in OPEC’s June production affirms a continuation of its market share strategy.
Meanwhile, OPEC added a new member in July, Gabon, and next month Nigeria’s Mohammed Barkindo will take over as the group’s secretary general.
This comes at a critical juncture for OPEC, after a spate of infighting and disagreements. Analysts said these two decisions which were taken at the June meeting could lay the groundwork for future cooperation on bigger issues.
Libyan oil production rose 60,000 b/d to 310,000 b/d in June as exports from the eastern port of Marsa el-Hariga resumed in late May after a three-week blockade caused by a dispute between the country’s two rival national oil company factions.
The North African country’s production remains less than a quarter of its 1.6 million b/d production capacity, but in early July Libya’s National Oil Corp. (NOC) agreed to unify its rival administrations under one management structure, a positive step for the country’s beleaguered oil sector.
Analysts, however, said production could only see a sustained increase if the new national unity government unites with several other factions to reopen the country’s two largest oil terminals — the 340,000 b/d Es-Sider and 220,000 b/d Ras Lanuf facilities.