OPEC March crude oil production hits record plunge, downgrades second quarter global oil demand forecast

The Organization of the Petroleum Exporting Countries (OPEC) data shows that the organization's crude oil production recorded a record decline last month, as major member countries were affected by the conflicts in the Middle East. According to the monthly report obtained from the OPEC Secretariat, OPEC's crude oil production in March plummeted by 7.88 million barrels per day to 20.79 million barrels per day. The decline was mainly driven by Iraq, Saudi Arabia, the United Arab Emirates, and Kuwait. This is the largest single-month drop since the 1980s. The conflict between the US-Israel alliance and Iran has led to the closure of the key Persian Gulf shipping lane, the Strait of Hormuz, for six weeks, forcing oil-producing countries in the region to halt production. Prices of refined products such as jet fuel, diesel, and gasoline have skyrocketed, threatening global economic inflation. On Monday, Brent crude futures were trading around $102 per barrel. Previously, US President Donald Trump vowed to block Iran's oil exports through the Strait of Hormuz after failing to reach a diplomatic solution over the weekend, with Iran threatening retaliation. The report from the OPEC Secretariat did not seem to mention the strait or its closure. The production drop this time exceeded the record decline of 6.28 million barrels per day set in May 2020, when OPEC+ significantly cut production due to the collapse of global fuel demand caused by the COVID-19 pandemic. This data is largely consistent with the monthly survey assessment released last week. The report shows that Iraq saw the largest decline in March, with daily production plummeting by 2.56 million barrels to 1.63 million barrels. Saudi Arabia followed closely, with daily production dropping by 2.31 million barrels to 7.80 million barrels. OPEC has lowered its global oil demand forecast for the second quarter by 500,000 barrels per day, but maintained its forecast for the year due to an upward adjustment in demand in the second half of the year. Before the outbreak of war on February 28, OPEC+ major member countries were in the process of restoring production capacity that had been shut down for several years. During the monthly video conference on April 5, they agreed to symbolically increase production in May to continue the recovery process. The next meeting is scheduled for May 3. In early March, OPEC had issued its February monthly report stating that Saudi Arabia had significantly increased its crude oil production in February this year, on the eve of military strikes by the US and Israel against Iran, to cope with potential disruptions in Middle East supply. At the same time, OPEC maintained its forecast for strong global oil demand growth this year. For a long time, Saudi Arabia has played the role of a "moderator" in the global oil market, increasing production when supply is disrupted and cutting output when there is oversupply.