By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) agreed on Tuesday to continue gradually easing production cuts amid a rebound in oil prices.
The alliance of oil producers which consists of the original OPEC members and other producers led by Russia will boost output in July, in accordance with the group’s April decision to return 2.1 million barrels per day to the market between May and July.
However, the production policy beyond July was not decided on, and the group will meet again on July 1.
This came as no surprise as the market expected no change despite considerations of rising COVID-19 cases in India and the possibility of Iranian oil coming back on the market.
The alliance had announced massive crude production cuts in 2020 in an effort to support prices when the coronavirus pandemic coincided with a historic demand shock following a brief oil war.
OPEC+ initially agreed to cut oil production by a record of 9.7 million barrels per day last year as global fuel demand collapsed, before easing cuts to 7.7 million and eventually 7.2 million from January. By July, the group’s production cuts will be on track to stand at 5.8 million barrels per day.
OPEC Secretary-General, Mr Mohammad Barkindo said on Monday that he did not believe higher Iranian supply would be a cause for concern for the cartel’s plan.
“We anticipate that the expected return of Iranian production and exports to the global market will occur in an orderly and transparent fashion,” Mr Barkindo said in a statement.
Iran, which is exempt from the present cut agreement, is in discussions with six world powers to revive its 2015 nuclear deal. The restoration of a deal could lead to more oil on the global market in the coming months.
Nigeria Records Lesser Production as Oil Output Rises in May
Nigeria, a key member of the curb agreement, was one of the producers that limited the growth of oil that entered the market last month, according to a Reuters survey.
In Nigeria, exports slowed from a number of terminals even as OPEC oil output rose in May following the group agreement to ease supply curbs under a pact with allies.
Also, a drop in Iranian exports and involuntary reductions in Angolan exports also aided in limiting the pumping of more oil.
The 13-member cartel pumped 25.52 million barrels per day in May, the survey found, up 280,000 barrels per day from April, indicating that output has risen every month since June 2020 with the exception of February.
The OPEC+ agreement allows for a 277,000 barrels per day increase in OPEC output in May versus April, plus Saudi Arabia had pledged to add 250,000 barrels per day as part of a plan to gradually loosen a 1 million barrel per day voluntary cut had made in February, March and April.
But with reductions in other countries offsetting the Saudi move, the increase in May OPEC supply output found by the survey is less than expected, and the group is still pumping much less than called for under the deal.
OPEC compliance with pledged cuts was 122 per cent in May against 123 per cent in April.
The biggest increase in May of 340,000 barrels per day came from Saudi Arabia, OPEC’s largest producer, as it began to unwind the voluntary cut and raised output as part of the May 1 OPEC+ boost.
OPEC’s Number 2 producer, Iraq also pumped more in May, the survey found, adding an extra 70,000 barrels per day and pushing output beyond its quota.
Libya, one of the OPEC members also exempt from making voluntary cuts, boosted output in May after a force majeure on oil loadings from the port of Hariga was lifted.
Dipo Olowookere