Saudi Arabia and Iraq Have Exceeded OPEC's Production Ceiling

Recent data shows that OPEC member countries produced one million barrels of oil more than the ceiling set by the organization last week; three-quarters of this excess production comes from Iraq and Saudi Arabia. The Wall Street Journal, citing OPEC's monthly report, states that Iraq produced nearly 3.8 million barrels of oil in May. If this production level is sustained, it would represent a national record for the country. Saudi Arabia also produced a total of 10.3 million barrels of oil per day, which is historically unprecedented. Overall, the Organization of the Petroleum Exporting Countries reports that its members produced nearly 31 million barrels of oil in May. During the latest OPEC meeting held on June 5 in Vienna, the oil ministers set a daily production ceiling of 30 million barrels for the next six months. Iran, at that meeting, called for conditions to allow its entry into the market following the lifting of sanctions, contingent on the finalization of the nuclear negotiations. Iran itself is the fourth country on the OPEC list that produced more oil in May 2023 compared to the same month last year, with an increase of 92,000 barrels, nearly an 8% rise. Besides Iraq and Saudi Arabia, which account for 76% of the excess oil production this month, Libya also ranks third ahead of Iran. Reports indicate that Iraq has achieved new successes in Asian markets, and Saudi Arabia has compensated for some of its previous sales declines in the U.S. and China while also supplying its domestic refineries. Some analyses suggest that Saudi Arabia's decision to produce over 10 million barrels per day is aimed at 'bringing to its knees' other OPEC producers, including its major Middle Eastern rival, Iran. Meanwhile, Iran is also seeking to increase its exports to Russia in the coming days, coinciding with initial requests to return to the market if the final nuclear agreement is drafted, although it seems that a significant portion of the payments from these exports will be used to purchase items from Russia itself. Last month's OPEC production was the highest since September 2012 and 4% more than the same month last year.