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, an S&P Global Platts survey showed Friday. Saudi Arabia kept some fields offline and pumped 9.70 million b/d in the month, a 120,000 b/d drop from April, the survey of 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 US 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, though 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 a ratcheting of regional tensions, including attacks on a key Saudi pipeline that kingdom officials have blamed on Iran, and pressure from the US 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 10.31 million b/d 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 has been in Russia since last Thursday, meeting with Russian counterpart Alexander Novak to debate the future of the 1.2 million b/d supply cut agreement, which is set to expire at month’s end.
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 US, reported May output of 11.11 million b/d, compared to its quota of 11.19 million b/d.