OPEC’s crude oil production in May increased less than expected, falling short of the OPEC+ agreement’s planned output hike.
According to a Reuters survey, all 12 OPEC members produced 26.75 million barrels per day (bpd) in May. This was 150,000 bpd more than April’s output.
However, the five OPEC members that had pledged production cuts and were supposed to increase output by 310,000 bpd only raised it by 180,000 bpd.
The shortfall was mainly due to Iraq reducing production to balance previous overproduction. Saudi Arabia and the United Arab Emirates (UAE) also raised output by less than their targets.
Saudi Arabia, OPEC’s largest producer and leader, made the biggest increase in May, adding 130,000 bpd. This is not surprising since Saudi Arabia had the largest share of previous cuts.
OPEC+ plans to unwind production cuts gradually, adding 411,000 bpd in May, June, and July.
Earlier this month, the group announced it would boost July production by another 411,000 bpd, citing healthy market conditions and a stable global economic outlook.
Morgan Stanley analysts noted that the expected 411,000 bpd increase in May did not fully happen. They said actual production gains were hard to spot, especially in Saudi Arabia.
Despite this, Morgan Stanley expects OPEC+ to add about 420,000 bpd between June and September. This increase could create a surplus in the oil market.
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