Oil output from OPEC fell in May, hitting a five-year low as the group warned that U.S.-China trade tensions could lead to slower economic growth and weak fuel demand.
Production from the 14-nation producer club fell by 236,000 barrels per day last month to 29.88 million bpd, according to independent sources cited by OPEC in its monthly report. It was the first time OPEC pumped below 30 million bpd since June 2014.
The slump in production comes as OPEC is considering whether to extend a six-month deal to hold down output. In the monthly report, OPEC says it will carefully consider the economic outlook when it meets with Russia and other oil-exporting nations in coming weeks.
“Throughout the first half of this year, ongoing global trade tensions have escalated, threatening to spill over, and geo-political risks remained in many key regions,” OPEC said. “This has resulted in a slowdown in global economic activities, and weaker growth in global oil demand, both compared to a year earlier.”
OPEC expects the global economy to remain under pressure in the second half of 2019, largely due to trade disputes, casting uncertainty over oil demand.
The group now expects global oil demand to grow by 1.14 million bpd in 2019, slightly lower than its last forecast. OPEC expects producers outside the group to hike output by 2.14 million bpd this year, meaning supply growth will swamp the rise in demand.
Concerns about softening demand have pushed oil prices to five-month lows, but crude futures rose about 3% on Thursday on reports of tanker attacks in the Gulf of Oman.
OPEC’s output cuts and supply disruptions continue to lend support to the market. Together with Russia and other producers, OPEC is trying to keep 1.2 million bpd off the market.
In May, top OPEC producer Saudi Arabia’s output fell by 76,000 bpd to 9.69 million bpd. The kingdom continues to voluntarily pump well below its quota of 10.31 million bpd.
Oil supplies also continued to fall in Iran and Venezuela, both of which have been targeted by U.S. energy sanctions. In Iran, production fell by 227,00 bpd to 2.37 million bpd, while Venezuela’s output fell 35,000 bpd to 741,000 bpd.
Nigeria, Africa’s largest producer, also saw output fall by 92,000 bpd to 1.73 million bpd.
The losses were slightly offset by production increases in Iraq and Angola.