OPEC Oil Production Fell Short Of OPEC+ Target In May

By Charles Kennedy of OilPrice.com

OPEC’s crude oil production in May increased less than called for in the OPEC+ agreement which had a large output hike planned for last month.

All 12 OPEC members produced 26.75 million barrels per day (bpd) in May, up by 150,000 bpd from April, a Reuters survey showed on Monday.

The five OPEC members that have pledged cuts in the OPEC+ agreement and are now gradually unwinding these cuts had to raise their combined output by 310,000 bpd. But they only lifted production by 180,000 bpd, according to the Reuters survey of data from oil-flow tracking companies and sources at OPEC, oil firms, and consultants.  

That’s because Iraq made cuts to compensate for previously chronic overproduction and Saudi Arabia and the United Arab Emirates (UAE) raised output by less than their targets, the Reuters survey found.

Saudi Arabia made the largest hike in May compared to April. OPEC’s top producer and de facto leader, and leader of the OPEC+ alliance, raised output by 130,000 bpd, per the survey.

That’s not unusual as Saudi Arabia had the largest share of cuts.

OPEC+ producers who have made cuts in the previous three years are now unwinding these at a pace of 411,000 bpd in May, June, and July.

The OPEC+ group earlier this month decided it would boost July production by another 411,000 bpd, citing “current healthy oil market fundamentals and steady global economic outlook.”

In a note on Monday, commodity analysts from Morgan Stanley said the 411,000 barrels daily that OPEC+ said it would add to oil production in May did not materialize.

“Notwithstanding the around 1 million-barrel-a-day increase in production quotas between March and June, an actual increase in production is hard to detect,” the team, led by Martijn Rats said in the note, as quoted by Bloomberg.

“Notably, it does not appear that production in Saudi Arabia has ramped up significantly,” according to Morgan Stanley.

Still, the bank believes that OPEC+ would add some 420,000 bpd to its crude production between June and September, tipping the market into a surplus.