BISMARK – The Organization of the Petroleum Exporting Countries (OPEC) oil supplies dropped drastically in March 2019, with a reduction of overall output of 500,000 barrels a day, representing a four-year low for the organization. The reduction, while representing one-half of a percent of oil demand worldwide, nonetheless is a drop equivalent to the full monthly oil production of any four OPEC member countries put together.
This lull, according to reports, is due in-part to lessened output of oil on the part of Saudi Arabia, as well as lowered production by Venezuela, which is currently in the midst of a crisis in their economy. These two countries – in addition to other, non-OPEC countries such as Russia – are apparently attempting to combat a large drop in the price of crude that occurred in late 2018 by reducing the amount of oil on the open market by approximately 1.2 million barrels a day. This move, OPEC is hoping, will serve to siphon off excess supplies of oil currently on the market and subsequently drive up the price globally as a result.
In March, OPEC’s output dropped by over 500,000 barrels per day for a total of 30.02 million barrels per day, according to reports; this is the lowest output by the organization since February 2015, where OPEC produced 29.97 million barrels per day. Overall, in 2019, OPEC production has dropped by over 1.5 million barrels per day, resulting in a 30 percent jump of Brent crude (sweet light crude) oil prices.
Saudi Arabia has been reported as being especially aggressive in their willingness to reduce their oil output until worldwide prices rise; in March alone, the Middle-Eastern country lowered production by 324,000 barrels per day, reducing production to less than 10 million barrels per day. This represents a big drop from their zenith of oil output in November, which was 11.1 million barrels per day.
Venezuela has also been contending with the impact of sanctions imposed in the United States by government-owned oil company PDVSA, as well as political upheaval throughout the land. Nonetheless, Venezuela’s maladies have actually helped to serve OPEC’s goals; in March, Venezuela’s output fell in March by 289,000 barrels per day for a total of only 732,000 barrels per day.
Iraq has also reportedly reduced oil output in March by 126,000 barrels per day to approximately 4.5 million barrels per day in total. Libya, in contrast, actually increased oil production in March by 196,000 barrels per day, for a total of over 1 million barrels per day.
U.S. President Donald Trump has called upon OPEC numerous times – both on Twitter and when speaking publicly – to increase their oil production in order to lower prices, requests that OPEC member countries have so far failed to heed. Meanwhile, OPEC is scheduled to hold a meeting member and alliance country members in June, at which time the possibility of whether or not to extend oil reduction output further into 2019 will be on the table.
OPEC is an intergovernmental organization of 14 nations, founded in 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), and headquartered since 1965 in Vienna, Austria. As of September 2018, the then 14 member countries accounted for an estimated 44 percent of global oil production and 81.5 percent of the world’s “proven” oil reserves, giving OPEC a major influence on global oil prices.
Economists often cite OPEC as a textbook example of a cartel that cooperates to reduce market competition, but one whose consultations are protected by the doctrine of state immunity under international law. However, the influence of OPEC on international trade is periodically challenged by the expansion of non-OPEC energy sources, and by the recurring temptation for individual OPEC countries to exceed production targets and pursue conflicting self-interests.