OPEC Output at 11-Month Low But Iraq Still Bent on Pumping Full-Tilt

OPEC production low is not strictly a result of willful self-restraint. File Image / Pixabay

Once again, the Organization of the Petroleum Exporting Countries (OPEC) is being credited by analysts and media for achieving low production outputs under its crude reduction strategy aimed at rebalancing the global market, even though the cuts are involuntary.

And, once again, there are strong signals that boosting, not reducing, output is the main goal of many OPEC members.

According to a Reuters survey, OPEC pumped 32.19 million barrels per day (bpd) last month, down 90,000 bpd from February: the news agency points out that the March total is the lowest since April 2017.

The survey went on to state that adherence by producers in the deal rose to 159 percent of agreed cuts from 154 percent in February; however, these percentages are misleading in that the very same survey concedes that the low March production was due to declining Angolan exports, Libyan outages, and a further slide in Venezuelan output - all involuntary market circumstances and nothing to do with the spirit of cooperation that was supposed to have driven the OPEC cutbacks - and which cartel boosters repeatedly insist is stronger than ever.

For the record, natural declines in some oil fields are said to be the reason Angola exported 48 cargoes in March, two fewer than in the same month of 2017; production in Libya slipped because of stoppages at two fields, El Feel and El Sharara; and output dropped to 1.56 million bpd in March in Venezuela, where the oil industry is starved of funds because of an economic crisis.

Perhaps a more realistic glimpse of the mindset of OPEC members was provided on Wednesday by Iraq: Jabar al-Luaibi, that country's oil minister, reportedly met in Baghdad with Brad Carson, a senior executive  in charge of extractive projects at Exxon Mobil, to further earlier discussions about a multi-billion-dollar project to boost output from several southern oilfields.

A statement from the minister's office cited Carson as saying Exxon hopes to reach a final agreement over the project, which would consist of building oilpipelines, storage facilities, and a seawater supply project to inject water into the Luhais, Nassiriya,Tuba, Nahr Bin Umar and Artawi oilfields, in order to boost oil recovery.

In January, a Reuters survey showed that Algeria, Iraq, and Nigeria were pumping at record highs - which suggested that OPEC in 2018 was shaping up to have the same amount of cheaters that impacted its efficacy in 2017 and caused it to extends its reduction deal through this year.