OPEC production falls to 5-year low as demand forecasts dim

OPEC brought its oil production down to 29.876 million barrels per day in May according to the latest edition of OPEC’s Monthly Oil Market Report (MOMR) released on Thursday—a five-year low for the oil cartel as it struggles to control member production to keep oil prices out of the doldrums.

That production route represents a decrease of 236,000 barrels per day month on month as Iran’s production falters under the weight of tenacious sanctions levied by the United States.

Iran’s May oil production fell to 2.370 million barrels per day, a decrease of 227,000 barrels per day from April. Nigeria and Saudi Arabia, too, both produced fewer barrels in May, with Nigeria’s production falling to 1.733 million barrels—a decrease of 92,000 barrels per day. Saudi Arabia’s oil production fell to 9.690 million barrels per day, a decline of 76,000 barrels per day.

Both Angola and Iraq increased their May production, with Angola adding 74,000 barrels per day to reach 1.471 million barrels per day, while Iraq increased oil production by 94,000 barrels per day, to 4.724 million bpd.

This month’s MOMR offers a reduction in 2019 world oil demand, with OPEC projecting it would increase by 1.14 million barrels per day—a reduction of 0.07 million barrels per day last month’s report. Total global oil consumption is expected to average 99.86 million barrels per day in 2019, according to the report.

“Throughout the first half of this year, ongoing global trade tensions have escalated, threatening to spill over, and geo-political risks remained in many key regions,” OPEC said in its report. “This has resulted in a slowdown in global economic activities, and weaker growth in global oil demand, both compared to a year earlier. Meanwhile, non-OPEC supply continues to increase at a high pace, while the voluntary production adjustments as per the Declaration of Cooperation (DoC) have again risen to record-high conformity levels.”

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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