OPEC’s oil production plunged by the most in three years in July due to Saudi Arabia’s deeper cut to support crude prices, Bloomberg reported on Tuesday.
The outlet’s survey showed that OPEC’s output was down 900,000 barrels per day (bpd) last month, to an average of 27.79 million bpd. It is the sharpest drop since 2020, when the group started slashing production in the wake of Covid lockdowns and declining demand.
The survey showed that Riyadh delivered on the vast majority of the promised cut, slashing production in July to 9.15 million bpd in the face of lackluster economic data in China and recession fears in the United States. Nigeria and Libya also saw their outputs slide last month by 130,000 bpd and 50,000 bpd, respectively, according to the study. Traders reportedly expect that Riyadh will announce the extension of the measure into September in the coming days.
A Bloomberg report cited tanker-tracking data indicating shipments by OPEC’s allied top crude producer, Russia, has declined to a seven-month low at just under 3 million barrels per day.
Last month, Riyadh announced it would extend its voluntary crude output cut of 1 million bpd for another month to include August, while Russia simultaneously announced a 500,000 bpd reduction in exports for August. The cuts will amount to 1.5% of global supply.
The two countries will chair an online review of market conditions by key OPEC+ nations on August 4, while the full 23-nation OPEC+ alliance is due to meet in late November, according to the report.
OPEC+, which comprises the Organization of the Petroleum Exporting Countries (OPEC), and allies (including Russia) agreed in October to cut its output by about 2% of world demand from November until the end of 2023. The group later agreed to further curbs in an effort to balance out prices.
Oil prices have recovered as global supplies tighten, reaching a three-month high above $85 a barrel.
On Wednesday, Brent crude futures were trading at $84.26 a barrel, while US West Texas Intermediate (WTI) futures were trading at over $80 per barrel.
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