Organization of Petroleum Exporting Countries, OPEC’s oil production output slumped in May from near a record high as attacks on Nigeria’s oil industry and other outages outweighed supply rise in Iran and Gulf members, a Reuters survey revealed on Tuesday, May 31.
A surge in supply from Saudi Arabia plus Iran suggests the group’s top producers remained focused on market share, following the failure of an initiative in April between OPEC and non-OPEC producers to support prices by freezing output.
With OPEC meeting in Vienna on Thursday, June 2, outages are effectively achieving the supply restraint on which producers could not agree. Those disruptions are supporting oil prices, which are close to 2016 highs, and the rally has reduced the urgency of any new attempt at deliberate supply curtailment.
“There is a tiny chance of a bullish surprise but as things stand right now, the odds are the continuation of OPEC’s market-share policy,” said David Hufton, of oil brokers PVM.
Supply from OPEC fell to 32.52 million barrels per day (bpd) this month, from 32.64 million bpd in April, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants.
OPEC output has climbed since the group abandoned in 2014 its historic role of cutting supply to prop up prices, in a shift led by Saudi Arabia.
There are more indications, however, that some producers are struggling to maintain supply.