Uche Cecil Izuora
The Organization of Petroleum Exporting Countries (OPEC ) crude production was exposed to shock as the body registered a record plunge in March as conflict in the Middle East throttled exports from key members.
The Output from the organization collapsed by 7.88 million barrels a day (MMbpd) to 20.79 MMbpd in March, driven by losses in Iraq, Saudi Arabia, the United Arab Emirates and Kuwait, according to a monthly report from its secretariat. It’s the steepest drop in data going back to the 1980s.
The conflict between a U.S.-Israeli alliance and Iran has shuttered the Persian Gulf’s vital Strait of Hormuz waterway for six weeks, forcing regional producers to shut in output. It has sent prices for products like jet fuel, diesel and gasoline soaring, threatening the global economy with a wave of inflation.
International oil futures traded near $102 a barrel in London on Monday, as U.S. President Donald Trump vowed to blockade Iranian flows from Hormuz after failing to reach a diplomatic solution at the weekend, and Tehran threatened retaliation. The report from OPEC’s secretariat appeared to make no references to the strait or its closure.
The plunge surpasses a drop of 6.28 MMbbl in May 2020, when the Organization and partners slashed output as global fuel demand collapsed during the COVID-19 pandemic. It’s similar to the assessment in Bloomberg’s monthly survey, published last week.
Iraq suffered the biggest decline in March, slumping by 2.56 MMbpd to 1.63 MMbpd, according to the report, compiled by the organization’s Vienna-based research department. It was closely followed by Saudi Arabia, down 2.31 million to 7.8 million a day.
The OPEC reduced estimates for global oil demand in the second quarter by 500,000 bpd, though offsetting increases in the second half of the year left the annual level unchanged.
Before the war erupted on Feb. 28, key OPEC+ nations had been reviving production shuttered several years ago. At a monthly video conference on April 5, they agreed a symbolic increase for May to continue the process as they plan to meet again on May