Daily Management Review

Iran, Venezuela Loss Offset By OPEC Increase, Record High Oil Output In August: IEA


09/15/2018




Iran, Venezuela Loss Offset By OPEC Increase, Record High Oil Output In August: IEA
A report on global oil production by the International Energy Agency titled Oil Market Report has shown the global crude output reached a record high of 100 million barrels per day (bpd) for the month of August.
 
The partial declines of output by some countries were offset by an increase i n production of crude by the member countries of the Organization for Petroleum Exporting Countries (OPEC). This despite an increase of 2.6 million bpd in production by non-OPEC members. US led the pack. According to the predictions of the IEA, there would be a growth of 2 million bpd in production by non-OPEC countries in 2018 and by 1.8 million bpd in 2019 which would be led by "relentless growth led by record output from the U.S."
 
A nine month high was reached by OPEC's crude supply at 32.63 million bpd in August notwithstanding the fears of decrease in production in some of the major producers of crude like Venezuela and Iran.  Countries like Nigeria, Saudi Arabia, Libya and Iraq offset the fall in production in the other OP{EC member countries, the report showed. 
 
A decision to increase production of crude from July this year was taken by the OPEC after two years of curbing production to shore up global oil prices and this managed to offset the drop in output from Iran and Venezuela.
 
There is fear that Iran will see a drastic drop in its oil exports because of sanctions by the Trump administration scheduled to be imposed from, November this year following the decision of the United States to pull itself out of the Iran nuclear deal in May. There was a dramatic drop in production in Iran in August with a fall of 150,000 bpd to reach a lowest point since July 2016 at 3.63 million bpd. This was because reduction of orders from oil importers because of the proposed Trump sanctions.
 
The multiparty Iran nuclear deal is officially known as the Joint Comprehensive Plan of Action and a number of European powers and the likes of Russia and China were party to it. Under the deal, Iran promised stopping its nuclear program against lifting of international sanctions against it. US President Donald Trump has alleged that Iran is not living up to its promise and hence has decided to impose fresh sanctions. The partial sanctions have already seen the Iranian currency rial falling. 
 
On the other hand, crude production in Venezuela has fallen because of a protracted economic crisis in the country and the country has seen a reduction of about 1 million bpd within a span of just two years. 
 
At the same time, the report also pointed towards a bullish outlook for demand in oil. The agency did not change the predictions for global oil demand for 2018 and 2019 which was held at 1.4 million bpd and 1.5 million bpd respectively in the report.
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 (Source:www.cnbc.com)






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