Output from the Organization of Petroleum Exporting Countries (OPEC) fell by 170,000 barrels per day this month, down from a year-long high in July, according to feedback from a new Reuters survey, which now stands at 32.83 million bpd.
The drop in output came as Libya faced renewed conflict in the Oil Crescent and OPEC members increased their compliance to preexisting production quotas.
The cartel’s No. 1 and No. 2 producers, Saudi Arabia and Iraq, cut output last month, causing compliance to rise by five points to 89 percent – just under the high of 90 percent from earlier in the year.
Nigeria, the other major OPEC producer exempt from the 2016 agreement, also showed stagnated output, as promised in a July bloc-wide meeting. The presence of long-term domestic strife had diminished Abuja’s oil profits by almost one-half at the worst. Similarly, Libya’s exemption rests on the country’s inability to raise output to those levels previously seen under dictator Muammar Ghaddafi’s regime.
The production cuts extend from January 2017 to March 2018—at least for now—but some OPEC and NOPEC members would prefer to see the deal extended to June 2018.
The cartel’s leader, Saudi Arabia, raised exports in the latter half of August, making it difficult to predict how much oil reached international markets. The November OPEC agreement does not limit exports, only domestic production.
“There have been strong exports in the last couple of days. We could potentially see exports only slightly down versus July,” said an industry source referring to Saudi output.
Kuwait’s oil minister Essam al-Marzouq said last week that OPEC’s November meeting would discuss whether the bloc would extend the cuts further or decide to terminate it.
“At our next meeting at the end of November...the most important items will concern the fate of the agreement to extend or terminate the production cut,” Essam al-Marzouq said in an interview with Kuwait TV on Monday, as carried by Reuters.
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…