OPEC output dips in December

January 25, 2016

Oil production from the Organization of the Petroleum Exporting Countries (OPEC) fell by 130,000 b/d in December on lower volumes from Iraq, Nigeria and Saudi Arabia, according to Platts.

December output decreased to 32.28 MMb/d from 32.41 MMb/d in November. Indonesia, which rejoined OPEC in December, is estimated to have contributed some 700,000 b/d of crude.

“Collapsing oil prices and oversupply used to be a recipe for, at the very least, an emergency OPEC meeting,” said Margaret McQuaile, senior correspondent for Platts.

“That is no longer the case, however, and Saudi Arabia and its Gulf allies appear to be as committed to their laissez-faire production policy as they ever were. Without the support of these countries for an emergency meeting, it seems unlikely that one will take place in the very short term, at any rate,” she said.

Volumes from Saudi Arabia dipped by 50,000 b/d to 10.1 MMb/d. Iraqi output fell by 50,000 b/d month-on-month, to 4.25 MMb/d from an adjusted November volume of 4.3 MMb/d.Nigerian production dipped by 40,000 b/d to 1.86 MMb/d as a slightly shorter loading program was exacerbated by the declaration of force majeure on Brass River crude exports.

Libyan production in December averaged 380,000 b/d, largely unchanged from November and still below the 480,000 b/d achieved in March, which was its strongest month in 2015. Libya's oil output continues to languish at a fraction of the 1.58 MMb/d level pumped before the 2011 uprising due to instability in the country and technical difficulties at oil fields.

Iran is estimated to have produced 2.89 MMb/d in December, up 10,000 b/d from November. Sanctions imposed in mid-2012 saw the country's oil trade limited to 1 MMb/d and its customer base squeezed to a handful of Asian countries and Turkey. These sanctions were lifted in January 2016 after the International Atomic Energy Agency verified that Iran had complied with its nuclear commitments under a landmark deal agreed with six world powers last July.

Iranian crude output and exports are expected to rise in the coming months though it remains unclear how quickly Iran's order to its state-owned oil companies to increase crude output by 500,000 b/d will translate into a similar volume flowing onto world oil markets. Iran has said it plans to double its oil exports to 2 MMb/d within six months of the removal of sanctions.

Crude prices, meanwhile, remain under pressure from oversupply and brimming stocks and are trading at multi-year lows. Brent futures sank as low as US$27.10/bbl in January, the lowest level since early November 2003. OPEC's own crude basket, representing streams from all 13-member countries, stood at $22.48/bbl. 



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