(World Oil) – OPEC’s crude production fell to a new 36-year low last month as the Iran war continued to choke off exports from the Persian Gulf and forced further shut-ins, according to a Bloomberg survey.
Output from the Organization of the Petroleum Exporting Countries declined by 420,000 bpd to 20.55 MMbpd in April, the lowest since 1990, driven by deeper losses in Kuwait and Iran, the survey showed. The group’s production had already plunged by 8.6 MMbpd in March, the biggest slump in decades, when the conflict first shuttered the Strait of Hormuz waterway.
The supply loss in the Persian Gulf—the biggest oil-market disruption in history—has bolstered the price of jet fuel, diesel and gasoline, threatening a renewed wave of inflation and a global recession. Oil futures are being buffeted by the erratic process of finding a diplomatic solution, tumbling 7% in London on Wednesday on reports the US sees an imminent agreement.
OPEC was also rocked last week when the United Arab Emirates announced it would leave the organization, following years of friction with group leader Saudi Arabia over the limits on how much it can produce. Bloomberg’s survey for April includes figures for the UAE for the final month before its exit takes effect on May 1.
Despite the closure of Hormuz, several key nations among OPEC and its allies agreed last weekend to proceed with a nominal and symbolic increase of their output quotas in June. That would continue the process—at least on paper—of restoring halted production that the alliance had been engaged in before the war.
The survey showed that Kuwait saw the biggest losses last month, with output dropping by 470,000 bpd to 800,000 bpd—less than a third of pre-conflict levels. The country’s exports dwindled to just 22,000 bpd, according to tanker tracking data compiled by Bloomberg.
It was followed by Iran, which had managed to maintain exports in the initial stages of the war while preventing others from using the strait, but is now under pressure from a U.S. blockade on its shipments. U.S. Central Command said Monday that American forces have redirected 50 vessels since the blockade began on April 13. Iran’s production fell by 180,000 bpd to 3.05 MMbpd, doubling its pullback since the start of the war.
Bloomberg’s production survey is based on ship-tracking data, information from officials and estimates from consultants Rapidan Energy Group, FGE NexantECA, Kpler and Rystad Energy.
