OPEC has so far avoided a bruising intra-bloc market share battle, with top exporter Saudi Arabia's crude oil production falling to a four-and-a-half-year low in May, even as sanctions-hit Iran, and Venezuela continue to see their output contract, latest S&P Global Platts survey has shown.
Nigeria also saw production fall significantly in the month, hampered by a fire at its Trans Forcados crude pipeline that forced shut down and force majeure on key export grade, Bonny Light that was lifted mid-May.
The shutdown was a blow to the Forcados exports of roughly 240,000 barrels a day (bpd). Shell manages the crude export terminal, while Heritage Energy operates the pipeline.
According to S&P Global Platts survey, Nigeria's production dropped to 1.86mbpd last month against 1.95mbpd recorded in April.
Saudi Arabia kept some fields offline and pumped 9.70 million b/d in the month, a 120,000 b/d drop from April, a survey by Organisation of the Petroleum Exporting Countries (OPEC) production found. The month-on-month decline matched that of Iran, which produced 2.45 million b/d in May, while struggling to find buyers after the U.S. declined to renew sanctions waivers that expired at the beginning of the month.
Iran, once the second-highest producer within OPEC, pumped its fewest barrels since November 1988, and many analysts expect further shrinkage due to the sanctions, although it has been able to maintain some exports through grey market channels to avoid detection.
In all, OPEC's 14 members pumped 30.09 million b/d in May, a 170,000 b/d fall from April, and the lowest since February 2015, before Gabon, Equatorial Guinea, and the Republic of Congo joined and Qatar was still a member, the Platts survey found.
Despite regional tensions, including attacks on a key Saudi pipeline that kingdom officials have blamed on Iran, and pressure from the U.S. to keep the oil market well-supplied, Saudi Arabia has kept its crude output relatively muted, saying it saw no need to raise production.
In fact, Saudi production has been well below its quota of 10.31mbd under an OPEC/non-OPEC supply accord, which went into force in January, with the kingdom persisting in its aim of draining what it sees as a glut of oil in storage to bolster prices.
Saudi energy minister, Khalid al-Falih, said he believes the cuts will be extended, though talks were ongoing on whether Russia and the other non-OPEC partners could see their quotas eased.
Russia, the world's second largest oil producer after the U.S., reported May output of 11.11 million b/d, compared to its quota of 11.19 million b/d.
The OPEC/non-OPEC coalition is expected to hold its biannual summit in Vienna, Austria, in the coming weeks, though an exact date has yet to be pinned down. The meeting was originally scheduled for June 25-26, though some countries have asked to move it to July 3-4.
Venezuela, which has seen its output almost halved in a year, with its spiralling economic crisis exacerbated by U.S. sanctions that began in January, produced 720,000bpd in May, according to the survey, its lowest since a nationwide strike debilitated its oil industry in January 2003.
The declines were partially offset by major gains in Iraq, which appeared to flout its production quota by hitting a record high of 4.82mbd, according to the survey.
Angola also saw a 40,000bpd rise, as it began shipments of new crude grade Mostarda.
Among OPEC's 11 members with quotas under the supply accord, compliance stood at 117% in May, led by Saudi Arabia, which was 610,000bpd under its cap. Iraq was the least compliant, at 310,000bpd above its limit.
The OPEC/non-OPEC agreement exempted Iran, Libya, and Venezuela from quotas.