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While the whole world talks about how the global supply glut needs to come down, oil production is actually expected to increase, and soon, says a new report from Platts.
The OPEC production survey released by Platts on Thursday said that Libya and Nigeria—the African duo exempt from the bloc’s production cut—could continue to increase oil production in the coming months.
Total production from OPEC countries jumped 220,000 barrels per day between May and June, Platts’ figures showed. Surging output from Libya and Nigeria has caused the bloc to exceed the 31.9 million-bpd production limit it had promised last November by 600,000 barrels—figures that include OPEC’s newest member, Equatorial Guinea, and do not include OPEC’s suspended member, Indonesia.
Despite the higher production for June, OPEC’s official compliance is at 116 percent because the exemptees’ production increases do not count against the bloc’s pledged maximum output. As OPEC’s largest producer, Saudi Arabia has shouldered the lion’s share of the cuts, compensating for new output and exports from No. 2, Iraq.
June averages for Libya – a war-torn nation struggling to rebuild its economy since the toppling of Muammar Gaddafi’s regime in 2011 – ran as high as 810,000 bpd, a three-year high. Nigerian output for the same month rose 50,000 bpd, averaging 1.78 million bpd, the highest since January 2016 before separatists in the Niger Delta began attack foreign oil projects in fossil fuel-rich areas.
Combined January through June output from Nigeria and Libya stood 380,000-bpd higher than it did in October – when OPEC members negotiated the production quotas currently in place.
All price gains from January, when the 1.2 million-barrel cut went into effect, have been erased due to high output from Nigeria, Libya, and shale producers in the United States.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…