OPEC’S production falls by most in 3 years

OPEC’s crude oil production fell in July by the largest amount in years, according to a new Bloomberg survey.

According to the results of the survey, OPEC’s crude production fell 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 rushed to cut its output in the wake of Covid lockdowns and crashing demand.

The survey showed that Saudi Arabia carried the heaviest load in cutting production in July, producing 9.15 million bpd. Nigeria and Libya also saw their production dip last month by 130,000 bpd and 50,000 bpd, respectively.

OPEC+’s Joint Ministerial Monitoring Committee (JMMC) meeting has been scheduled for August 3 to assess the state of the oil markets, according to sources who spoke with Oilprice.com last week. Bloomberg reported today that Saudi Arabia and Russia would chair an online review of the markets at a meeting on August 4.

Analysts largely expect Saudi Arabia to extend its voluntary 1 million bpd supply cut into September as it looks to support the rebound in oil prices, which have Brent pushing $85 as of Tuesday afternoon. But some anticipate Saudi Arabia unwinding at least part of its 1 million bpd cut beginning next month.

Oil markets are expected to tighten during this half of the year, with even the IEA predicting an oil shortage of 1.7 million bpd in H2. Standard Chartered has predicted a 2.81 million bpd shortfall this month, with smaller shortfalls—but still shortfalls—in September and beyond.

Brent prices are expected to climb in the fourth quarter above $90 per barrel—a level that some suggest would entice Saudi Arabia to unwind its voluntary cuts.