OPEC has published its monthly report with production volumes at the end of January. From the end of December to the end of January, the total production quantity fell by 509,000 barrels per day to 28.86 million barrels per day. What’s going on? If we hear of significant declines in OPEC’s production in recent years, the first thing that comes to mind is Saudi Arabia.
But no, the Saudis even increased their output by 57,000 barrels per day in January. No, the cutback this time comes from Libya. Libya, where output is down 344,000 barrels a day to just 796,000 barrels a day. Yes, there was something else? The civil war in Libya has been causing ups and downs in production for years, depending on who is currently controlling the oil fields and the terminals at the sea, or whether there is total chaos. And in January, production had collapsed extremely badly.
How fortunate for the other members of the cartel, who can virtually rest. They themselves did not have to cut back on a large scale in order for the total production volume to decrease. Besides Libya, Iraq has cut the most by 68,000 barrels a day. The focus is currently on Russia. It is a question of whether it will perhaps decide this week to follow OPEC’s latest recommendations. This is because OPEC wants to cut production even further in order to counter the drop in demand in China (thanks to the coronavirus). Finally, the Gulf States need a much higher oil price, as their national budgets are largely dependent on oil revenues.
By the way … OPEC currently believes (due to the coronavirus) that global oil demand will be 440,000 barrels a day less in the current quarter and 200,000 barrels a day less for the year as a whole.