OPEC’s Oil Production Fell Last Month Despite Plans to Increase

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(Bloomberg) — OPEC’s crude production fell last month despite the group’s long-awaited plans to increase, with much of the reduction stemming from looming US sanctions on Venezuela.

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Output from the Organization of the Petroleum Exporting Countries shrank by 200,000 barrels a day in April to 27.24 million a day, according to a Bloomberg survey. Venezuela accounted for about half of the decline as international producers such as Chevron Corp. wind down operations while President Donald Trump’s administration tightens sanctions. 

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It was less clear, though, why other OPEC members such as Saudi Arabia and the United Arab Emirates didn’t take advantage of the group’s agreement to finally bolster supplies.

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OPEC and its allies had resolved to start gradually reviving halted output in April, after delaying the plans several times for fear of undermining crude prices.

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Nonetheless, the United Arab Emirates — which had even secured a special carve-out to make extra increases — instead curtailed output by 80,000 barrels a day to an average of 3.25 million a day, according to the survey. Riyadh added just 20,000 barrels a day, pumping 8.97 million, only part of the agreed amount.

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The countries may have been trying to honor pledges to restrict output in order to compensate for previous overproduction, though the biggest quota offenders — the UAE and Iraq — remained well above their designated targets.

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OPEC’s surprising restraint throws more uncertainty onto what the cartel and its partners will decide on Monday, when they’re due to hold a video-conference to review production levels for June.

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Last month, Saudi Arabia stunned crude traders by steering the group to accelerate output increases in May, unleashing a hike of 411,000 barrels a day that was triple the originally scheduled amount. Delegates said the move was intended to punish errant OPEC+ nations like Iraq and Kazakhstan, though Riyadh may also have been heeding pressure from Trump to lower oil prices.

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Oil traders are bracing for the alliance to announce another supply boost during Monday’s call, potentially in line with the 411,000-barrel surge unveiled a month ago. Riyadh has briefed some industry figures on its ability to withstand the market slump that may result from raising production while demand remains so fragile.

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Brent futures sank to a four-month low below $60 a barrel in the days after OPEC+’s shock move last month, which was announced just hours after Trump unleashed a barrage of trade tariffs on China and other nations. The benchmark was trading near $61 in London on Thursday.

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Bloomberg’s survey is based on ship-tracking data, information from officials and estimates from consultants Rapidan Energy Group, FGE, Kpler Ltd. and Rystad Energy.

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—With assistance from Anthony Di Paola, Prejula Prem, Fabiola Zerpa, Lucia Kassai, John Deane and Salma El Wardany.

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