OPEC crude oil output is expected to rise in May as extra oil from Saudi Arabia, Nigeria and Iraq counters a further decline in Libyan supply.
Any extra supply from the Organization of the Petroleum Exporting Countries is likely to be welcomed by consumer nations concerned about the impact of oil prices well above USD 100 per barrel on economic growth and inflation. Supply from all 12 members of OPEC is expected to average 28.90 million barrels per day this month up from a revised 28.79 million barrels per day in April.
Mr Paul Tossetti, senior energy adviser at PFC Energy said that OPEC is not producing what it was producing in January before Libya went down. But the market seems to be fairly well supplied currently. The Libyan crisis has almost shut down output in what used to be Africa’s third largest producer. OPEC in January pumped 29.63 million barrels per day the most since December 2008.
OPEC meets on June 8th 2011 in Vienna to review its output policy, which it has not changed since it agreed to a record cut in production in December 2008 in the aftermath of economic crisis. Since then the target has become obsolete as the economy recovered and Saudi Arabia and others in OPEC unilaterally raised supplies, damaging OPEC’s credibility.
Most officials in the group said that supplies are adequate, although a delegate from one of OPEC’s Gulf countries has suggested OPEC could raise its output target in Vienna.
In May, Saudi Arabia has boosted supply by 100,000 barrels per day from an upwardly revised April level, partly due to increase demand from the country’s power plants. Nigerian supply has risen as Royal Dutch Shell added extra cargoes of Bonny Light crude to export programs for April and May as production surprised to the upside.
Iraqi output, excluded from OPEC output agreements was slightly higher with exports in the country’s south climbing to 1.7 million barrels per day due to higher production at the Rumaila field which BP Plc and CNPC are developing.
Among the countries with lower output, Libya’s production posted a further decline of 50,000 barrels per day in May to average 200,000 barrels per day. Until violence broke out earlier this year, output had been running near 1.6 million barrels per day.
Participants in the survey said that Angolan supply continued to reflect the impact of field maintenance, technical problems and declining output at some of the country’s older fields. Initial estimates suggest little impact on supply to the market from maintenance work at the Upper Zakum field in the United Arab Emirates.
