OPEC Output Boost Severely Limited
OPEC made only part of its planned production increase last month, with supplies hampered by disruptions in two of the group’s African members.
The Organization of Petroleum Exporting Countries added just 90,000 barrels a day in December, as a boost by Saudi Arabia was offset by losses in Libya and Nigeria, according to a Bloomberg survey.
The OPEC+ coalition led by Saudi Arabia and Russia has been restoring production halted during the pandemic, and on Tuesday agreed to press on with further increases at a rate of 400,000 barrels a day. But the process has been hindered as some members struggle with investment constraints and internal instability.
The coalition’s travails are helping to support oil prices even as global markets tip back into oversupply, with Brent crude futures trading near $80 a barrel in London on Wednesday.
Libya’s production is in turmoil again after the country enjoyed a year of recovery and stabilization. Output began to falter after militias shut the country’s biggest oil field, Sharara, ending the month down by 70,000 barrels a day at 1.06 million. With the outage dragging on -- and compounded by damage to a pipeline connecting the largest export terminal -- production is sinking to just 700,000 daily barrels.
In Nigeria, Royal Dutch Shell Plc warned of difficulties with shipments of crude oil from its Forcados terminal -- one of the country’s largest -- during the last 10 days of the month. The Bonny terminal, also operated by Shell, has also had trouble loading cargoes. The country’s output was down 110,000 barrels a day to 1.42 million.
Ten of OPEC’s 13 members were permitted to add roughly 250,000 barrels a day last month under the terms of the group’s accord with the wider coalition, but their combined hike amounted to only 150,000. While Angola managed a modest recovery last month, its output is down almost three times the amount required by the agreement.
The figures are based on ship-tracking data, information from officials and estimates from consultants including Rystad Energy AS and JBC Energy GmbH.
Constraints are hitting other countries in the wider coalition. Russia failed to boost oil output last month despite a generous ramp-up in its OPEC+ quota, indicating the country has deployed all of its current available production capacity.
--With assistance from Prejula Prem, John Deane, Anthony Di Paola, Fabiola Zerpa and Lucia Kassai.
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