Despite some Gulf OPEC members increasing crude oil production last month, the output is struggling to cover the dramatic slump in Libyan production as a result of ongoing violence in the North African country, according to a new report,
The 12-member Organisation of the Petroleum Exporting Countries’ (OPEC) production of crude oil declined around two percent in March to an average of 29.17 million barrels per day (b/d), according to new survey data from energy analysts at Platts in London.
While some Gulf countries, such as Saudi Arabia, the UAE and Kuwait, increased output, it was not enough to cover the loss of 930,000 b/d of Libyan supply, the survey found.
Ongoing unrest in Libya between rebel forces and those still loyal to Muammar Gaddafi has impacted production and output in March slumped by two thirds to an average of around 460,000 b/d, compared to 1.39 million b/d in February and 1.58 million b/d in January.
“Even the simple counting of barrels shows how difficult it will be for the market to recover from the loss of so much Libyan crude,” said John Kingston, Platts global director of news.
“Beyond that, the quality of the crude coming out of Libya is one of the highest in the world, with very good yields on the transportation fuels, particularly diesel, which the world needs. So one barrel of crude from another OPEC country doesn’t neatly replace one barrel of Libyan crude.”
While Saudi Arabia increased output by 300,000 b/d to an average of nine million b/d, the UAE increased production by 100,000 b/d to an estimated 2.5 million b/d and Kuwait boosted output by 70,000 b/d to 2.4 million b/d, Kingston said this was still not enough to cover the shortfall.
“The market will need to see a decline in demand to balance, and we are seeing signs of that reaction to higher prices ongoing,” he said.
Among the other members states, Angola increased production to 1.7 million b/d, while Nigerian and Venezuelan production dropped and Iranian output remained steady.
On Tuesday, OPEC said it expects oil demand to grow by 1.4 million b/d this year. "The market can be assured that in the months ahead, the Organization of the Petroleum Exporting Countries will continue its long-standing role of supporting oil market stability," it said.