Crude oil prices have lost more than 29% from the peak of $62 per barrel in May 2015. One of the main factors of the fall in oil prices was the massive production from OPEC (Organization of the Petroleum Exporting Countries). In July 2015, OPEC’s crude oil output was at 32.107 MMbpd (million barrels per day), according to the consensus from Bloomberg. In June 2015, OPEC’s output was at 2.469 MMbpd—the highest since August 2012.
On August 10, 2015, delegates from member nations reported that OPEC isn’t in the mood for a production cut. There won’t be a meeting ahead of the meeting in December 2015.
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In the last meeting on June 5, 2015, OPEC decided to maintain its member nations’ collective target of 30 MMbpd for the next six months in order to offset lower crude oil prices and defend its market share. So, OPEC has been producing more than its output quota. OPEC’s record production is affecting oil prices.
Saudi Arabia produced 10.57 MMbpd of crude oil in July 2015. It’s the largest crude oil exporter in the world. Iraq produced 4.194 MMbpd of crude oil in July 2015. Iran’s crude oil production was at 2.85 MMbpd of crude oil in July 2015. Lifting the oil sanction could boost Iran’s output by 500,000 barrels within one week. The record production from these nations will add more pressure to crude oil prices.
US oil and gas producers like Chevron (CVX), Anadarko Petroleum (APC), and ConocoPhillips (COP) are also affected by lower crude oil prices. They account for 18.61% of the Energy Select Sector SPDR ETF (XLE). These stocks’ crude oil mix output is more than 41% of their total production. Oil and gas ETFs like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Select Sector SPDR Fund ETF (XLE) are also affected by falling crude oil prices.