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OPEC pumped 26.03 million barrels per day (bpd) of oil in June, up 590,000 bpd from May, the cartel said Thursday as it forecast demand for its crude at 27, 7 million bpd this year, suggesting the market needs more oil from OPEC. . In his closely watched Monthly Oil Market Report– especially after the rift between key OPEC members Saudi Arabia and the United Arab Emirates – the organization said crude oil production increased mainly in Saudi Arabia, United Arab Emirates, Angola, in Iran and Kuwait.
The start of a trend?
June was the second month in which OPEC gradually eased production cuts – and the Saudis unwound their unilateral additional 1 million barrels per day over three months until the end of July.
For example, in June, OPEC’s top producer and the world’s largest oil exporter, Saudi Arabia, pumped 8.906 million bpd, up 425,000 bpd from May, according to secondary sources at l ‘OPEC. The United Arab Emirates increased production by 40,000 b / d to 2.68 million b / d, and Kuwait increased production by 25,000 b / d to 2.383 million b / d.
OPEC’s second-largest producer and a big underperformer when it comes to sticking to its cut share, saw production plummet in June; Iraqi production fell by 10,000 b / d to 3.938 million b / d.
Iran, exempt from the OPEC + pact, increased its crude oil production from 33,000 b / d to 2.47 million b / d, while the Islamic Republic increase the output ahead of a possible – or imminent if you ask Iran – the lifting of US sanctions in case the nuclear deal talks are successful.
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OPEC production data in June suggests the group sees a tight market capable of absorbing additional supply from OPEC.
The organization sees OPEC’s demand for crude in 2021 unchanged from the previous report at 27.7 million bpd, which would be 5 million bpd more than in 2020. Next year, demand for OPEC gross is forecast to increase a further 1.1 million bpd from 2021 — to an average of 28.7 million bpd.
Non-OPEC liquids
OPEC slightly revised its forecast for growth in non-OPEC liquids production this year by 26,000 bpd, due to lower production expected in Indonesia, UK, Azerbaijan, Brazil and Norway. The production forecast for 2021 has actually been raised for the United States and Canada compared to last month, due to higher than expected production in 2Q21.
“Although prices are higher than expected, none of the US independents raised their capital spending forecast for 2021 because most of the free cash flow was used to pay off debts. Nonetheless, some US independents reinvested some of their operating cash flow, some maintained their exploration and production (E&P) investment plans, and some went further and decided to stop production in mature fields to reduce costs, ”said OPEC, which has slightly revised its US production forecast upwards by 23,000 b / d, and now shows weak growth of 60,000 b / d j over a year.
All eyes are now on a potential resolution between Saudi Arabia and the United Arab Emirates – and now Iraq – on the base production levels used to determine each member’s production quota. The UAE and Iraq have both called for higher benchmarks that more closely reflect their true capability.
The date of the next OPEC + meeting has not yet been disclosed. Without OPEC’s additional supply, most analysts see the market tightening and oil prices rising.
By Tsvetana Paraskova for OilUSD
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