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OPEC Oil Production Drops Amid Iraqi Field Fire Crisis

Decline in OPEC Oil Production Amidst Iraqi Field Fire

Oil production within the Organization of the Petroleum Exporting Countries (OPEC) experienced a decline in January, primarily driven by a fire incident in Iraq’s largest oil fields.

Production Data Overview

According to the latest statistics, OPEC’s production rose to just above 27 million barrels per day in January, reflecting a reduction of approximately 70,000 barrels per day compared to the previous month. This decrease in output from Iraq overshadowed modest production increases from Kuwait and Venezuela.

Impact of Iraq’s Incident

On January 24, a fire erupted in a storage tank at the Rumaila field in Iraq, resulting in a significant production loss of 300,000 barrels per day, accounting for 25% of the field’s production capacity during the subsequent week. As a result, Iraq’s average production last month remained over 4 million barrels per day, aligning with the country’s OPEC allocation.

Regional Production Changes

Following Iraq, Kuwait reported the most substantial monthly production increase, which rose by approximately 60,000 barrels per day to reach 2.49 million barrels per day. Venezuela also noted an uptick, increasing production by 50,000 barrels per day for a total average of 900,000 barrels per day.

Future Production Plans

The OPEC+ alliance has announced plans to incrementally increase production by 120,000 barrels per day beginning in April, with a goal of gradually restoring 2.1 million barrels per day by the end of 2026. However, concerns over market stability have led to three prior postponements of this target, with only one month remaining to finalize the decision regarding the April increase.

Iraq’s Production Dynamics

Iraq’s current production levels are approaching its maximum allocation, a situation not witnessed since the share’s implementation at the start of last year. Additionally, Iraq has not yet initiated the extra discounts necessary to balance previous surpluses, a measure undertaken by both Kazakhstan and Russia.

OPEC+ Agreement Continuation

The OPEC coalition continues to adhere to its supply restriction agreement through the first quarter of the year, implementing gradual increases monthly. This strategy has been in active development since late 2022, aimed at stabilizing oil prices.

During a recent virtual assessment meeting, OPEC+—led by Saudi Arabia and Russia—decided to uphold the existing agreement. This cautious approach remains pertinent as global markets face pressures, particularly with diminishing demand from China, the world’s largest oil consumer, alongside rising alternative supplies from the Americas.

Summary Table: January OPEC Production Statistics

Country January Production (Barrels/Day) Change (Barrels/Day)
OPEC Total 27,000,000 -70,000
Iraq > 4,000,000 -300,000
Kuwait 2,490,000 +60,000
Venezuela 900,000 +50,000

The economic landscape remains complex as OPEC navigates the interplay of production decisions, market demands, and regional incidents. As the group evaluates future strategies, the balance between supply and market stability continues to define the oil industry.

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