OPEC is in the dark on the oil supply outlook for the second half of this year, with Iranian and Russian outages looking increasingly significant but Saudi Arabia reluctant to pump more due to fears of a price crash, sources in the organization said.
An oil contamination forced Russia to halt flows along the Druzhba pipeline, a key conduit for crude into Eastern Europe and Germany, in April. The suspension left refiners scrambling to find supplies and its duration is unclear.
Iran's oil exports are likely to drop further in May as the United States tightens the screw on Tehran's main source of income. Shipments from Venezuela, also under U.S. sanctions, could fall more in coming weeks.
The dearth of information is a headache for OPEC and allies led by Russia, which gather in June to decide whether to renew a supply-cutting deal. A panel of ministers meets on May 19 in Saudi Arabia to discuss the market and make recommendations.
Two delegates from OPEC said the Russian outage, on top of Iranian and Venezuelan export losses, would be discussed at the Jeddah meeting and it seemed more than a short-term technical glitch.
"It's potentially significant," one of the delegates said of the pipeline halt.
Still, the delegate added, the price of Brent crude - close to $70 a barrel, down from a 2019 high of $75.60 last month - suggested traders saw no major risk of any shortage.
Other OPEC sources said there were conflicting views on the significance of the Russian outage, and that the complexity of Russia's pipeline system meant the issue was not straightforward.
"I'm not quite seeing the impact in terms of supply shortage," another OPEC delegate said.
Analysts at Citigroup saw the Russian export loss as enough to affect the balance between supply and demand.
"While it is still difficult to assess the final impacts on balances, the severity of the problem could mean up to 400,000 bpd (bbl/d) of Russian exports could be pulled out of the market for longer than earlier anticipated," they wrote.
That would further tighten the market, with OPEC signaling even before the Druzhba outage that demand would exceed supply by more than 800,000 bbl/d in the third quarter.
A further cut by Russia would mean producers in the alliance known as OPEC+ exceed their pledged output reductions by an even greater margin.
The full extent of the drop in Iranian exports this month remains to be seen. Tehran's biggest oil customer, China, has yet to say whether it will keep buying despite the U.S. decision to end waivers that had allowed limited Iranian exports.
OPEC, Russia and other non-member producers are reducing output by 1.2 MMbbl/d from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices.
OPEC's agreed share of the cut is 800,000 bbl/d but its actual reduction is far larger due to the losses in Iran and Venezuela, which are exempt from voluntary reductions under the OPEC+ deal.
U.S. President Donald Trump has said he called OPEC and the group's de facto leader, Saudi Arabia, and told them to lower oil prices. Riyadh, however, is reluctant to boost supply quickly and risk a price crash.
On May 8, a Gulf source familiar with Saudi plans said the kingdom had received moderate crude-buying requests from countries that previously took Iranian oil, although production would stay under its OPEC+ quota in June.
Iraq, another OPEC member able to raise output at short notice, said it would not decide unilaterally on any production boost.
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