OPEC production remained stable in December, Iraq increased production to hedge Venezuela's gap

The Zhitong Finance App learned that a survey based on ship tracking data, information provided by officials, and assessments by consulting firms Rapidan Energy Group, FGE, Kpler, and Rystad Energy showed that although Venezuelan crude oil production fell to its lowest level in two years, increased production in some member countries, including Iraq, hedged this gap, and OPEC crude oil production remained stable overall in December last year.

According to survey data, OPEC's average daily crude oil production slightly exceeded 29 million barrels during the month, which is basically the same as the previous month. Affected by pressure measures such as the seizure of oil tankers by the United States, Venezuela's average daily production fell by about 14% to 830,000 barrels.

Iraq and a few other member states chose to increase production and completed the final round of this round of the collective production increase plan. Afterwards, the alliance plans to suspend production increases in the first quarter of this year. Against the backdrop of the global crude oil market facing oversupply, the OPEC+ alliance led by Saudi Arabia plans to keep production stable until the end of March.

This week, the Trump administration seized Venezuelan leader Nicolas Maduro and announced that it would take over the country's crude oil export business indefinitely. The international crude oil market was impacted as a result.

Despite Trump's claim that US oil companies will spend billions of dollars to help rebuild Venezuela's dilapidated energy infrastructure, the country's short-term energy situation remains precarious. Affected by US sanctions and blockades, Venezuela was forced to shut down some oil wells in the oil-rich Orinoco Heavy Oil Belt last month.

This sudden sanctions are yet another geopolitical challenge facing the OPEC+ alliance. Currently, the alliance is facing multiple layers of pressure: not only to deal with record oversupply expectations, but also to deal with internal turbulence in Iran. At the same time, the ongoing conflict between Russia and Ukraine is also dragging down crude oil exports from ally Kazakhstan.

London crude oil futures prices are currently hovering at slightly over $60 per barrel, close to the lowest point in five years, and fiscal pressure on OPEC+ member states has increased sharply. Against this background of uncertainty, the eight core member states of the alliance reached a consensus again this month to maintain a production freeze in the first quarter of this year and suspend the large-scale production recovery plan launched last year.

In April of last year, despite sufficient supply in the global crude oil market, Saudi Arabia and its allies announced a quick restart of production capacity that had been idle since 2023. This decision shocked crude oil traders. Several OPEC representatives revealed that the move is aimed at regaining market share that has been taken over by rivals such as US shale oil producers in recent years.

According to the survey, the biggest source of production increase within OPEC+ in December was Iraq — its average daily production increased by 80,000 barrels to 4.37 million barrels. This level of production far exceeds the quota agreed by Iraq in the OPEC+ agreement, but official data used by the coalition shows that Iraq is still complying with production targets.

Prior to the suspension of this round of production increases, OPEC+ had officially approved the restoration of about two-thirds of idle production capacity. The alliance's cumulative idle production capacity has reached 3.85 million b/d since 2023. Currently, 1.2 million b/d of idle production capacity is still awaiting restart.

Saudi Arabia and seven other core OPEC+ member countries will hold a video conference on February 1 to review production policies for the following months.