Though the Organisation of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) confirmed at the last meeting that they intend to proceed with the implementation of the agreement to gradually increase oil production over the next three months, it is anticipated that rise in global oil demand may push up output.
While OPEC’s April data showed that Nigeria pumped 1.548mbpd in April, the latest S&P Global Platts survey puts the country’s production at 1.6mbpd, above its 1.51mbpd quota under the production cuts agreement.
Iran pumped its largest volume of crude in almost two years in April, while non-compliance Russia also boosted its output yet again, bringing total production of OPEC+ to a three-month high, according to the latest S&P Global Platts survey.
The cartel is however optimistic that accelerating vaccination programmes and rising fuel demand will raise global oil demand by 5.95 million barrels per day (bpd), this year despite the current COVID-19 crisis in India, keeping its demand outlook unchanged from last month.
World oil demand is set to average 96.5 million bpd in 2021, OPEC said in its closely-watched Monthly Oil Market Report (MOMR) yesterday. This would be nearly six million bpd higher than the demand last year, with the acceleration expected in the second half of 2021.
OPEC revised down its estimates for global oil demand for the second quarter by 300,000 bpd due to lower-than-expected demand in North America in the first quarter and the COVID resurgence in India and Brazil. However, the organisation raised its outlook for oil demand for both the third and fourth quarters of 2021 by 150,000 bpd and 290,000 bpd, respectively.
The higher anticipated demand in the second half of this year is the result of positive fuel data from the United States, while “the acceleration in vaccination programmes in many regions allows for optimism,” OPEC said.
Indeed, OPEC produced 25.28 million b/d, up 80,000 b/d from March; Russia and eight other non-OPEC partners in the group’s supply accord added 13.21 million b/d, an increase of 130,000 b/d, Platts survey found.
The rising output is a preview of the wave of OPEC+ crude set to hit the market over the next few months.
In anticipation of rising global oil demand, the alliance plans to roll back its quotas by 350,000 b/d in May, another 350,000 b/d in June, and 441,000 b/d in July, for a total of 1.14 million b/d rises.