OPEC’s oil output defied expectations in June, rising for the second consecutive month according to a Reuters survey. This increase comes despite ongoing production cuts implemented by the wider OPEC+ alliance, which includes major non-OPEC producers like Russia.
The survey, which tracks oil supply to the market and is based on industry sources and shipping data, revealed that OPEC’s 12 member countries collectively pumped 26. 7 million barrels per day (bpd) in June. This represents a modest increase of 70, 000 bpd compared to May’s figures.
Two key factors contributed to the rise. Firstly, Nigeria, Africa’s top oil producer, managed to raise output by an estimated 50, 000 bpd. This comes after years of underperformance within the OPEC+ deal, which previously led to production cuts for the nation. Secondly, Iran, which is exempt from the OPEC+ agreement due to ongoing sanctions, saw its output climb to 3. 2 million bpd in June. This matches the Islamic Republic’s recent five-year high achieved in November 2023.
However, the survey also highlights production declines within OPEC. Iraq, the alliance’s second-largest producer, witnessed a decrease of 50, 000 bpd compared to May. This exemplifies the challenges faced by some members in consistently meeting production targets.
The rise in OPEC’s output comes amidst a complex global energy landscape. Geopolitical tensions, particularly the ongoing war in Ukraine, have disrupted traditional supply chains and driven oil prices higher. Consumers, including the United States, have called on major producers to increase output to alleviate pressure on prices.
OPEC+, led by Saudi Arabia, has previously pledged to manage production levels to maintain market stability. However, the June increase suggests a potential shift in strategy, with some members prioritizing revenue generation over strict adherence to agreed-upon cuts.
Analysts remain divided on the implications of OPEC’s rising output. While it could provide some relief for consumers facing high energy costs, it might not be enough to offset global supply disruptions entirely. The coming months will be crucial in determining the long-term impact of OPEC’s production decisions on the global oil market.