OPEC production in May falls to minimum of 5 years amid sanctions against Iran – International Energy Agency

TASS Russian News Agency | Jun 14, 2019 at 2:07 PM

TASS, June 14. Production of OPEC countries in May decreased by 230,000 barrels per day - to 29.95 million barrels, which is the lowest level since 2014, the June report of the International Energy Agency (IEA), says.

"OPEC production fell to its lowest level since 2014, as deliveries from Iran decreased due to sanctions, as well as due to lower production in Saudi Arabia and Nigeria," the report said. In May, the OPEC agency estimates the free capacity at 3.2 million barrels per day. Iran's production in May fell by 210,000 barrels per day - to 2.4 million barrels. Saudi Arabia reduced daily production by 110,000 barrels - to 9.7 million barrels, Nigeria - by 60,000 barrels, to 1.69 million barrels. The deal to reduce production was carried out by OPEC countries by 133%, by non-OPEC countries - by 169%, calculated by the IEA.

Sanctions against Iran

In May 2019, Iranian oil production was at its lowest level since the 1980s, according to an IEA report. Since May, temporary permits for the purchase of Iranian oil, issued by the United States to eight countries in November 2018, ceased to operate. Oil exports seriously decreased in May by 480,000 b/d - to 810,000 b/d. Of these, about 240,000 b/s accounted for condensate. In comparison, a year ago, Iran exported 2.6 million b/s of oil. The United States set as its goal to reduce Iranian exports to zero. Tracking Iranian exports is becoming increasingly difficult, the report says, as the National Iranian Oil Company (NIOC) has turned off the tracking system on its tankers. "Most likely, most of the barrels are sent to Asia, and they also remain in storage," IEA says. In May, China, India and Turkey bought Iranian oil, other buyers are difficult to determine. Medium and heavy grades of Iranian oil can replace supplies from Saudi Arabia, Iraq, the United Arab Emirates and Russia, IEA experts say. In May, it is clearly visible that China has increased its purchases of oil from Iraq, Russia and Brazil, while at the same time reducing imports from Iran. India reduced purchases of Iranian oil, replacing it with batches from the United States.

Vienna Agreement

The deal to reduce production was carried out by OPEC countries by 133%, by non-OPEC countries by 169%, the IEA calculated. The production of 11 OPEC countries participating in the agreement on the reduction of production in May was at around 25.58 million b / s.

If Russia comes out of OPEC + production cuts, its production may grow at a slow pace in the second half of 2019, the report says. In general, this will add up to 75,000 barrels per day to the annual volume; in 2020, growth can already be up to 140,000 barrels per day.

OPEC+ states will take the decision on the level of crude production for the second half of 2019 at the end of June.