Global oil supply disruptions could reach around 5 million barrels per day (bpd) as Western sanctions in response to Moscow’s invasion of Ukraine cut Russian output and other producers also grapple with production or export challenges.
That is on top of some 2.2 bpd of crude that the Organisation of Petroleum Exporting Countries (OPEC) and allies OPEC+, have yet to return to the market, following record output curbs imposed after the pandemic reduced demand.
OPEC members Iran, Libya and Venezuela are not participating in the OPEC+ output curbs but have faced setbacks that have lowered production.
A Reuters report quoting the International Energy Agency (IEA), projected that for instance, Western sanctions on Moscow and buyer reluctance could lead Russian oil supplies to drop by 3 million bpd from April.
So far, its production fell by 0.57 million bpd by April 6, compared with the average production in March of 11.01 million bpd, the report stated.
For Iran, it is pumping about 2.6 million bpd, some 1.2 million bpd less than in 2018 when former U.S. President Donald Trump withdrew the United States from a 2015 nuclear accord and re-imposed sanctions.
It’s the same with Kazakhstan’s crude oil output, which has been reduced by 320,000 bpd due to storm damage to the Caspian Pipeline Consortium terminal in Russia in March.
In addition, Libyan oil production, at about 1.3 million bpd, is well below levels of 1.6 million bpd before the civil war that broke out in 2011. An outage in March caused a temporary loss of over 300,000 bpd of production.
Iraq pumped 4.15 million bpd of oil in March following field outages in the south, 222,000 bpd short of its production quota under an agreement with other OPEC+ producers, data from state-owned marketer SOMO seen by Reuters showed.
For Nigeria, the report stressed that output fell 100,000 bpd in March after incidents prompted force majeure to be declared on the Bonny and Brass River streams although it was later lifted on Brass River.
Meanwhile, crude oil production by OPEC and its allies fell in March from February for the first time in more than a year, the latest S&P Global Commodity Insights survey has found.
OPEC’s 13 members raised output by 60,000 bpd to 28.73 million bpd, but that was more than offset by a 160,000 bpd decline by the bloc’s nine allies, who pumped 13.91 million bpd.
With the net decline of 100,000 bpd, the widening gap between the OPEC+ production and quotas jumped to a record-high 1.24 million bpd – casting further doubt on the group’s ability to meet growing global oil demand, which many analysts expect to return to pre-pandemic levels in 2022.
The drop was the first since February 2021, when Saudi Arabia instituted a unilateral voluntary 1 million b/d cut to help prop up the market that at the time was still wobbly from resurgent coronavirus cases.
Since August, with the global economy on firmer footing, the producer group has stuck to a plan of gradually raising quotas by 400,000 bpd each month but has faced mounting pressure from the US, India, Japan, and other major oil-consuming nations for accelerated supplies to cool off rising energy prices.
But several countries have not hit their output targets in months, and March’s shortfall resulted in a compliance figure of 148 per cent for the 19 members with quotas, according to S&P Global calculations.
