By Ijeoma Agudosi-Lagos
Oil production by the organisation of petroleum exporting countries (OPEC) plummeted less than 1 percent in December, the first month after the group refused to cut output as crude prices tumbled.
Output by the OPEC fell 122,000 barrels a day, or 0.4 percent, to 30.239 million during the month following declines in Saudi Arabia, Libya and the United Arab Emirates, according to Bloomberg survey of oil companies, producers and analysts.
However, Nigeria’s production climbed 110,000 barrels a day to 2.08 million, which was its second-biggest increase.
Nigeria’s production is often marred by unrest in the Niger Delta, the country’s main oil-producing region, leading companies to declare force majeure, a legal step that protects them from liability when they can’t fulfill a contract for reasons beyond their control.
Royal Dutch Shell Plc had lifted force majeure and resumed production at the EA field in December after repairs were completed and also reopened the Nembe Creek oil pipeline.
OPEC’s November’s total output was revised 199,000 barrels a day lower to 30.361 million because of changes to Iraqi, Kuwaiti, Nigerian and Ecuadorean estimates.
OPEC ministers are scheduled to convene June 5 in Vienna to discuss oil output and possibly take measures to stabilise shrinking oil prices which is badly hurting economy of unstable nations like Nigeria.
OPEC left its production quotas unchanged at a Nov. 27 meeting in Vienna, prompting speculation that the group will let crude slide low enough to slow U.S. production that’s climbed to the highest level in three decades.
Oil Prices
“Ultimately the big producers will make significant cuts to support prices,” Dan Heckman, Kansas City, Missouri-based national investment consultant at U.S. Bank Wealth Management, said.
His firm oversees about $120 billion. “It will take time to work off this huge supply glut.”
Saudi Arabia trimmed output by 150,000 barrels a day to average 9.5 million last month, the biggest decline.
The 300,000-barrel-a-day Khafji offshore fields in the Saudi Arabian-Kuwaiti neutral zone were shut Oct. 16 because of environmental concerns.
“For a long time OPEC, in particular the Saudis, has been the swing producer,” Adam Wise, who helps run a $6 billion oil and gas bond portfolio as a managing director at John Hancock in Boston, said.
Libyan output fell 130,000 barrels a day to 450,000 in December, the lowest level since July. Production has slumped since the 2011 rebellion that ended Muammar Qaddafi’s 42-year rule.
The North African country is now pumping less than 300,000 barrels a day after Islamist militants shifted attacks to energy facilities.
Iraqi is OPEC’s second biggest producer whose production is now 3.52 million, the most since 2000.