The oil industry saw two different stories emerge at the beginning of March. On the one hand, oil production from OPEC countries was at its lowest level for 10 years, while on the other hand, US oil production reached a new record high for 2019.
For OPEC, a survey by Reuters shows the cartel pumped 510,000 barrels per day (bpd) less in February than it did in January, with producers undershooting their quotas under the current deal. In addition, Libya’s production is at a fraction of what it was at the start of the year in the wake of an oil port embargo. Even with Iraq and Nigeria overshooting their quota, compliance with the overall quotas was still well above agreed levels at 128%.
Oil prices have dropped by around 25% in recent months as the already diminished demand was further exacerbated by the coronavirus outbreak, which has already affected the Chinese economy and its demand for oil.
In the US, meanwhile, official figures from the US Energy Information Administration put the country’s average oil production in 2019 at 12.23 million bpd, an 11% increase on 2018. These figures do of course predate the coronavirus outbreak, so it remains to be seen how lower prices will affect production in the US shale patches, although Darren Woods, the CEO of oil and lubricant giant Exxon Mobil Corporation, said back in 2017 that its Permian assets could still yield good returns even at a $40/barrel oil price.