OPEC Production Lowest Since 2014 as U.S. Squeeze on Iran Continues
OPEC’s output, already at the lowest since 2014, slid again last month as U.S. sanctions took a further toll on exports from Iran.
Iran has been pumping the least crude since the mid-1980s as the U.S. imposes penalties on any country or company that deals with Tehran, part of President Donald Trump’s campaign to pressure the country over its nuclear program. Iranian production dropped by 70,000 bps last month to 2.21 MMbpd, according to a Bloomberg survey.
That was the biggest decline among the 14 members of the Organization of Petroleum Exporting Countries, though there were others too, according to the survey of officials, analysts and ship-tracking data. The cartel’s production fell by 130,000 bpd to 29.87 MMbpd, the lowest in five years, though changes in membership since then blur the comparison.
OPEC reduced output at the start of this year as part of an agreement with other producers, such as Russia, to prevent an oil glut forming amid faltering demand and surging U.S. shale production.
The strategy has shown mixed results. Although oil prices climbed almost 30% in the first quarter of this year, they’ve since eased, and at just under $65/bbl in London are below the levels most OPEC nations need to cover government spending.
Prices have gained some support in recent weeks as Trump continues to pile diplomatic pressure on Iran, which has been accused of retaliating by seizing and targeting tankers passing through the Persian Gulf.
After Iran, the next-biggest declines in OPEC’s production last month were in Iraq and Libya, which both saw losses of 50,000 bpd. Libya’s output, erratic for several years as political factions vie for control of the country, slipped as an unidentified group briefly halted its biggest oil field, Sharara.
The losses were partially offset by gains elsewhere, such as in OPEC’s biggest member, Saudi Arabia.
Production increased by 50,000 pd to 9.87 MMbpd in the kingdom, which often hikes output during the summer months to meet an increase in domestic demand for power generation. Even with the boost, Riyadh is keeping supplies well below the target agreed with fellow OPEC nations.