Oil production from OPEC members jumped by 336,100 bpd (barrels per day) in May despite a recent agreement to extend the existing cuts into 2018.
Libya and Nigeria, which are exempt from the cuts due to issues with their supply networks, were the largest contributors. Iraq also made a sizeable contribution despite still not cutting production enough to hit its agreed quota of 4.35 million bpd.
Libya’s production increased by 178,000 bpd to 730,000 bpd as competing factions in the country move to a more reconciliatory stance, allowing the often-disrupted supply systems to stay online.
Nigeria experienced a similar increase of 174,000 bpd, taking it to 1.68 million bpd and enabling it to reclaim from Angola the title of Africa’s largest oil producer. The increase was a result of infrastructure coming back online following militant attacks last year.
Despite OPEC’s upbeat assessment of the global economy, the growth in US shale production is likely to meet much of any corresponding increased demand for oil. A number of oil giants—including Shell, the maker of hydraulic oil Shell Tellus S2 M 46—are investing heavily in the US shale patch and driving shale production to new levels of economic efficiency.
This unrestricted growth, combined with unexpected growth from OPEC members, can only hinder OPEC’s efforts to correct the supply glut. While many were disappointed by OPEC’s decision to not deepen its production cuts, others feel it may yet pull out its biggest guns to rebalance the oil market.