Global crude oil production in 1Q19 was 75.8 million b/d, down by over 1.8 million b/d compared to the previous quarter. The sharp drop was largely due to OPEC+ compliance to 1.2 million b/d of agreed upon production cuts as well as production disruptions in Iran, Venezuela and Libya.
Looking forward, the global crude market will become even tighter as the cancellation of the sanction waivers for Iranian oil buyers, coupled with deteriorating situation in Venezuela and fresh militant conflicts in Libya weighs on markets. Global crude oil production in 2Q19 is expected to drop by another 470,000 b/d.
Given the tightening supply, the OPEC+ alliance is expected to partially lift its guidance on production cuts. Greater clarity will come in June as information on Iranian oil buyer responses and developments in Venezuela and Libya become more clear. For now, Stratas estimates the 1.2 million b/d of OPEC+ cuts will be revised down to 800 Mb/d in June. Meanwhile, the U.S., Brazil, and Iraq are expected to boost production in the forecast period. Thus, global crude supply will quickly recover after 2Q19, reaching over 77.8 million b/d by 4Q20.
From Q1 2019 to Q4 2020
Iraq: New projects such as the Sheike Adi and Ber Bahr field developments, output ramp up efforts at producing fields such as the Missan, West Qurna, Shaiken fields, and production resumptions from the fields that were previously controlled by ISIS such as Qayara and Najmah will help Iraq increase crude production by around 600,000 b/d through 2020.
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