World in Oil Shadow
Although the world is distancing itself from consuming fossil fuels the decisions taken about oil are still effective in the world. That is why the world is still affected by OPEC decisions, albeit passively. However, major changes are always likely to occur. During 2017, all oil producers and consumers will have their eyes turned on these decisions.
OPEC last decided to cut its production ceiling as of January this year in a bid to prop up prices. The Organization of the Petroleum Exporting Countries has recently released its monthly report for December 2016. Indonesia left the oil producer group and OPEC has now 13 members.
The OPEC output was reported at 33.08 mb/d in December 2016, down 220,900 b/d month-on-month. It happened after OPEC saw a 175,000 b/d output hike in November. Therefore, one can note that OPEC's total production was down only 46,000 b/d on a monthly basis.
In its last ministerial meeting in November, the Organization agreed to cut its output by 1.2 mb/d, starting from January. According to secondary sources, OPEC's crude oil production was down 221,000 b/d in December from the previous month which was 33.08 mb/d.
Iraq, Angola and Libya account for the bulk of oil production, Saudi Arabia, Nigeria and Venezuela cut their output more than fellow member states.
A review of OPEC data shows that the organizations' December 2016 output was the highest in history.
The present article is aimed at reviewing OPEC member states' oil output in the final months of last year.
Iran
International sanctions were lifted on Iran in January 2016 and Iran was able to raise its production. Iran was exempted from OPEC's output cut decision. Its production reached 3.98 mb/d in October, which increased to 3.99 mb/d the following month. According to official data, Iran's oil production grew 18.8% during the first nine months of 2016, year-on-year. Iran's September oil output was the highest since the late 1980s. Iran's Minister of Petroleum Bijan Zangeneh had announced earlier that the country would bring its oil production back to the pre-sanctions levels.
Algeria
Algeria has increased its production at a slow pace. It produced 1.171 mb/d of oil last October. Its production reached 1.184 mb/d in November and 1.149 mb/d in December.
Algeria’s state energy producer Sonatrach Group plans to increase output of natural gas and crude oil by 20% in the next four years as new projects start up.
Algeria is Africa’s biggest natural-gas producer and a member of the Organization of Petroleum Exporting Countries. Its crude production increased to 1.16 mb/d in November, the highest since 2013, after three years of declines and no change in 2015, according to data compiled by Bloomberg.
The nation hosted the 15th Ministerial Meeting of International Energy Forum (IEF) and OPEC Extraordinary Conference in November when they agreed to the outline of a deal to cut production for the first time in eight years. Brent crude has rallied 48% this year as OPEC will cut output as of January 1 amid a global glut.
Sonatrach will produce 69 million tons of oil equivalent this year, up from 67 million tons last year, according to company data.
Angola
Angola's oil output stood at 1.507 mb/d in October 2016. But it significantly increased its production in the last two months of the year. Its production reached 1.688 mb/d in November and 1.639 mb/d in December.
Angola saw its oil price gain ground in the run-up to January 1 when OPEC was to start cutting its output. In the first month of the year, Angola was selling oil at $54.5 a barrel, up 0.9% month-on-month. The price was up 102.3% year-on-year.
Ecuador
This South American country maintained its production in the final months of the year. Ecuador produced 542,000 b/d of oil last October and it added only 2,000 b/d to its production in November and December.
Ecuador was among oil producers whose economy was damaged by oil price slump. That is why it is much willing to be able to supply its oil on the market at a much higher price.
The Ecuadorian government depends on oil for 30% of its revenue. Petrodollars also make up 50% of Ecuador's exports.
Gabon
Gabon joined OPEC several months ago, but its production is so low that it would not affect OPEC's total output significantly. There is not complete data available about Gabon's oil production. However, its production was unchanged at 210,000 b/d in January, February and March last year. Gabon is the fifth largest producer of oil in Africa.
Iraq
But Iraq was among countries that nobody imagined would increase its production suddenly. Iraq's oil minister agreed with oil production cut, but its output in December was 4.63 mb/d and many analysts believe that Iraq would not cut its production.
Kuwait
A leading OPEC oil producer, Kuwait kept its production unchanged in November and December. Kuwait's economy was seriously affected after oil prices sharply fell to below $50 in mid-2014. The Kuwaiti government was forced to sharply cut big subsidies it paid to its citizens. The energy sector in this country was also forced to axe jobs. According to OPEC data, Kuwait produced 3 mb/d of oil in October 2016, but it cut its production to 2.9 mb/d in November and to 2.844 mb/d in December.
Libya
Libya is still grappling with political chaos. It has so far failed to boost its output significantly due to persistent tensions across the country. Analysts believe that Libya's oil production would keep rising but at a slow pace. Undoubtedly, Libya will announce that it will continue to raise output to reach the pre-chaos levels. Libya produced 528,000 b/d of oil last October. Its output reached 577,000 b/d in November and 608,000 b/d in December.
Nigeria
Nigeria's oil production dropped in December and it failed to raise its output due to political unrest. Analysts say Nigeria's January production of oil depends on the government's success against rebels rather than on OPEC's production cut accord.
Nigeria produced 1.39 mb/d of oil in October 2016 and lifted its output to 1.538 mb/d in November and 1.94 mb/d in December. The Nigerian government had predicted to bring its output to 2.2 mb/d.
Qatar
Qatar is also among countries that seriously need oil price hike in a bid to make up for its major budget deficit. Official data show that oil production in this country in 2016 fell compared to 2014 and this trend will continue.
Qatar's oil output was 639,000 b/d in October 2016, which reached 646,000 b/d in December.
Saudi Arabia
Saudi Arabia is the largest producer of oil in the world, and its economy heavily depends on black gold. The Saudi government has embarked on economic reforms; however, its economy remains dependent on petrodollars. Its output was 10.626 mb/d in October 2016, which was up to 10.72 mb/d the following month. However, in December Saudi Arabia's oil production was down to 10.465 mb/d.
UAE
The United Arab Emirates saw its production fall by 6,300 b/d in December month-on-month. But in November, it had increased its oil output by 82,000 b/d from the preceding month. The pace of changes in the Emirati oil production was insignificant in the final months of the year. In October, UAE produced 3.188 mb/d of oil, which reached 3.195 mb/d in November and 3.22 mb/d in December.
Venezuela
In addition to oil giants in the world, Venezuela might have been the country that suffered the most from oil price slump. A staggering 700% inflation rate and political unrest in the country due to oil price fall has pushed the country to the brink of collapse. Ever since oil prices started falling in 2014, Venezuela has been leaving no stones unturned to find a solution to contain the oil price decline. Venezuela's output in January 2016 was 2.558 mb/d, which was down to 2.316 mb/d in October. Its production was 2.274 mb/d and 2.27 mb/d in November and December 2016, respectively.