Categories: Business

Report: Nigeria’s Losses Constrain OPEC Oil Output in May

Oil production output by the Organisation of Petroleum Exporting Countries (OPEC) rose in May as the group agreed to ease supply curbs under a pact with allies, but was dampened by involuntary reductions by Nigeria and Angola as well as a drop in Iranian exports.

The 13-member oil cartel has pumped 25.52 million barrels per day (bpd) in May, the survey found, up 280,000 bpd from April, with output rising every month since June 2020, except in February.

Hoping for a global demand recovery, OPEC and allies, known as OPEC+, decided from May 1 to ease more of the record supply cuts made in 2020.

OPEC+ meets today and delegates expect producers to stick to the existing plan, a Reuters report noted.

The OPEC+ agreement allows for a 277,000 bpd increase in OPEC output in May compared with April and Saudi Arabia had pledged to add 250,000 bpd as part of a plan to gradually unwind a one million barrels per day (bpd) voluntary cut made in February, March and April.

But with reductions in other countries offsetting the Saudi move, the increase in May OPEC output found by the survey is less than expected, and the group is still pumping much less than called for under the deal.

OPEC compliance with pledged cuts was 122 per cent in May, the survey found, versus 123 per cent in April.

The biggest increase in May of 340,000 bpd came from Saudi Arabia as it began to unwind the voluntary cut and raised output as part of the May 1 OPEC+ boost.

OPEC’s number two producer, Iraq, also pumped more in May, the survey found, adding an extra 70,000 bpd and pushing output beyond its quota.

Libya, one of the OPEC members exempt from making voluntary cuts, boosted output in May after a force majeure on oil loadings from the port of Hariga was lifted.

These increases were limited by involuntary reductions elsewhere in the group, with the biggest drop being Nigeria, where exports slowed from a number of terminals, in addition to Angolan supply, which has been in long-term decline.

Iran, which has managed to raise exports since the fourth quarter despite sanctions by the United, States, exported less in May due to lower demand in China.

The survey aimed to track supply to the market and is based on shipping data provided by external sources, Refinitiv Eikon flows data, information from tanker trackers such as Petro-Logistics and Kpler, and information provided by sources at oil companies, OPEC and consultants.

The report did not indicate the quantity produced by Nigeria in May, however, the Nigerian National Petroleum Corporation (NNPC) in one of its latest releases, noted that Nigeria maintained 1.52 million bpd OPEC production cut in the first quarter of 2021.

Emmanuel Addeh in Abuja with agency report