Baku, Azerbaijan, July 11
By Leman Zeynalova – Trend:
OPEC crude oil production is expected to average 30.2 million b/d in 2019, a decrease of 1.8 million b/d compared with the 2018 level, and production will decrease by 0.5 million b/d in 2020, Trend reports with reference to the Short-Term Energy Outlook (STEO) of the Energy Information Administration (EIA).
The forecast decline is the result of Saudi Arabia’s over-compliance with the December 2018 OPEC+ agreement in the first half of 2019 and rapidly decreasing crude oil production in Iran and Venezuel, reads the report.
“Combined production in Iran and Venezuela fell to an estimated 2.8 million b/d in June 2019, a 2.4 million b/d decrease compared with June 2018. These factors contributed to OPEC’s crude oil production averaging 29.9 million b/d in June, the lowest level since mid-2014,” said the cartel.
EIA’s forecast assumes the OPEC+ agreement will remain in place through the end of the first quarter of 2020, with OPEC+ continuing to target a balanced market through the forecast period.
EIA expects the level of production cuts will contribute to a draw in global stocks in the third quarter of 2019, before the global market sees some inventory builds in the fourth quarter of 2019 and a generally balanced market in 2020.
Compliance with production targets in the OPEC+ agreement will be a key factor for whether the level of global crude oil inventories remains higher than the five-year (2014–18) average during the forecast period, reads the report.
EIA estimates that during June 2019, Saudi Arabia’s crude oil production averaged an estimated 10.1 million b/d, increasing by 0.2 million b/d from May levels in response to seasonal domestic consumption increases and crude oil production declines in Iran. “Saudi Arabia’s crude oil production has decreased by about 0.9 million b/d since reaching its all-time high in November 2018, averaging about 10.0 million b/d in the first half of 2019.”
On July 2, OPEC producers and several non-OPEC producers (OPEC+), notably Russia, extended production cuts announced in December 2018 through the end of the first quarter of 2020. EIA expects Russia’s liquid fuels production to decline by 30,000 b/d in 2020 as a result of the cuts.
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