Saudi Arabia pumped over 100,000 bpd of crude oil more in May, with daily production reaching 10 million bpd, officials from the country’s oil industry said, as quoted by the Oil and Gas Journal, adding that plans are to add a further 100,000 bpd this month.
The news comes on the heels of Russian media reports that the country’s oil production recovered to 11.1 million barrels. This is 143,000 bpd above the country’s quota under the OPEC+ production cut deal, and only about 100,000 bpd below the record-breaking production rate in November 2016, which Russia took as the basis for its cuts.
In other words, while some analysts still wonder if the reports about Russia and Saudi Arabia discussing a production increase of 1 million bpd are just speculation or an action plan, the increase is already happening and it is making at least one other OPEC member unhappy.
Yesterday, Iraq’s Oil Minister Jabbar al-Luiebi said Baghdad “rejects unilateral decisions by some oil producers without consulting the rest of the members” of OPEC, clearly signaling that Saudi Arabia, leader of the OPEC pack as it may be, is not free to raise production without telling anyone about it.
There are already a lot of signs pointing towards a tough June 22 OPEC+ meeting, with Russia and Saudi Arabia clearly in favor of higher production and Iraq and Iran clearly opposed to it. Iraq is not really in a good position to oppose the raise, however. OPEC’s number-two never complied with its cut quota of 210,000 bpd. In fact, estimates by Platts show Iraq has exceeded its ceiling by the most within OPEC—by some 78,000 bpd since the start of the deal, with compliance at just 63 percent.
The upcoming OPEC+ meeting is shaping up as a tough one as some analysts have already warned. When OPEC agreed to cuts, some members, notably Iraq, took quite a lot of convincing that it was necessary to start cutting, and it looks like now they will need equally intensive convincing that it’s time to stop cutting.
By Irina Slav for Oilprice.com