OPEC output hits new low on Trump’s sanctions, supply pact

Saudi Arabia's Oil Minister Khalid Al-Falih talks to journalists at the beginning of an OPEC meeting in Vienna, Austria, on July 1, 2019. (REUTERS/File Photo)
Updated 06 July 2019

OPEC output hits new low on Trump’s sanctions, supply pact

  • Saudi Arabia is still voluntarily pumping less than an OPEC-led supply deal allows it to

LONDON: OPEC oil output sank to a new five-year low in June as a rise in Saudi supply did not offset losses in Iran and Venezuela due to US sanctions and other outages elsewhere in the group, a Reuters survey found.

OPEC pumped 29.60 million barrels per day (bpd) last month, the survey showed, down 170,000 bpd from May’s revised figure and the lowest OPEC total since 2014, the survey showed.

The Reuters survey suggests that even though Saudi Arabia is raising output following pressure from US President Donald Trump to bring down prices, the Kingdom is still voluntarily pumping less than an OPEC-led supply deal allows it to. OPEC renewed the supply pact at meetings this week.

Despite lower supplies, crude oil has fallen from a six-month high above $75 a barrel in April to below $63 on Friday, pressured by concern about slowing economic growth. “The decision of OPEC+ at the beginning of the week to extend its production cuts has done nothing to change this,” Carsten Fritsch, analyst at Commerzbank, said of this week’s drop in prices. “A series of disappointing economic data from the United States, China and Europe has sparked new concerns about demand.”

OPEC, Russia and other non-members, known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from Jan. 1 this year. OPEC’s share of the cut is 800,000 bpd, to be delivered by 11 members — all except Iran, Libya and Venezuela. The producers at meetings this week in Vienna extended the deal until March 2020.

In June, OPEC members bound by the agreement achieved 156 percent of pledged cuts, the survey found, more than in May, due to lower production in Iraq, Kuwait and Angola. All three of the exempt producers also pumped less oil.

The US reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and six world powers. Aiming to cut Iran’s sales to zero, Washington this month ended sanctions waivers for importers of Iranian oil.

Iran’s crude exports have declined to less than 400,000 bpd from more than 2.5 million bpd in April 2018.

In Venezuela, supply fell slightly in June due to the impact of US sanctions on state oil company PDVSA and a long-term decline in production, according to the survey.

Among countries pumping more, Saudi Arabia boosted supply by 100,000 bpd to 9.8 million bpd from May’s revised figure, the survey found. This is still below its OPEC quota of 10.311 bpd.

Output also rose in Nigeria, which last month overproduced its target by the largest margin.

June output was the lowest by OPEC since April 2014, excluding membership changes that have taken place since then, Reuters surveys show.

The Reuters survey aims to track supply to the market and is based on shipping data provided by external sources, Refinitiv Eikon flows data and information provided by sources at oil companies, OPEC and consulting firms. 


Russia says Bulgaria to complete pipeline stretch of TurkStream by 2020

Updated 21 min 51 sec ago

Russia says Bulgaria to complete pipeline stretch of TurkStream by 2020

  • Bulgaria last month struck a $1.2 billion deal with Saudi-based Arkad to complete the 474 km pipeline as early as 2020

SOFIA: Bulgaria has promised to complete its stretch of the TurkStream gas pipeline by 2020 as planned, Russian Foreign Minister Sergei Lavrov said on Monday, trying to tackle skepticism about the timescale of the project.

Last month Bulgaria signed a €1.1 billion ($1.2 billion) contract with Saudi-led group Arkad to build the 474 km pipeline across its territory.

Sofia hopes the whole pipeline, which Bulgaria has dubbed Balkan Stream, will become operational as early as 2020, but given that the contract with Saudi company was signed only in September, some industry officials are doubtful of the timeline.

Lavrov, speaking in Moscow at a briefing with his Bulgarian counterpart Ekaterina Zaharieva, said he was given assurances that the second part of TurkStream would be completed as planned.

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Last week, Russia’s Gazprom began filling the first part of the TurkStream pipeline, which runs via the Black Sea, with gas.

“The partners have underscored that the work will be finished on time, by 2020,” Lavrov said.

Russia, which is building TurkStream to bypass Ukraine to the south, has said its second portion, with an annual capacity of 15.75 billion cubic meters, will pass via Bulgaria to central Europe.

Earlier on Monday, Bulgaria opened the 11 km pipeline that links its gas transport network with Turkey as part of its push to transport Russian natural gas from TurkStream to central Europe and inspected the laying of pipes Arkad has started in northwestern Bulgaria.

The pipeline stretch is part of Bulgaria’s plans to link its southern border with Turkey to its western frontier with Serbia and provide a link to the Russia-backed TurkStream twin pipeline to Serbia, Hungary and Austria.

Last week, Russia’s Gazprom began filling the first part of the TurkStream pipeline, which runs via the Black Sea, with gas.

Moscow plans to launch the first part of the pipeline, with an annual capacity of 15.75 billion cubic meters, by the end of the year.

Speaking to officials at the opening in southern Bulgaria, Prime Minister Boyko Borissov said Balkan Stream was also a political highway ensuring peace along with its economic benefits.

Serbian Energy Minister Aleksandar Antic, who attended the inspection of construction works in northwestern Bulgaria, said Serbia will be ready with the pipeline on its territory by the end of the year and gas can flow once Bulgaria completes its part of the work.