OPEC output soars as Libya’s supply keeps increasing

OPEC meeting disappoints, gas price surge avoided. (Photo: Internet)

OPEC oil output has risen this month by 90,000 barrels per day (bpd) to a 2017 high, a Reuters survey found, led by a further recovery in supply from Libya, one of the countries exempt from a production-cutting deal.

A dip in supply from Saudi Arabia and lower Angolan exports helped to boost Opec’s adherence to its supply curbs to 84%. While this is up from a revised 77% in June, compliance in both months has fallen from levels above 90% earlier in the year.

The extra oil from Libya means supply by the 13 OPEC members originally part of the deal has risen far above their implied production target. Libya and Nigeria were exempt from the cuts because conflict had curbed their production.

A gain in Libyan and Nigerian output has added to the challenge the OPEC-led effort is facing to get rid of excess supply on world markets. To address this, ministers at a July 24 meeting moved to cap Nigerian output and officials are holding talks next week on improving compliance.

“There is a need to align all countries to achieve full compliance,” a source close to Opec said of the compliance talks, which will be held on Aug 7-8 in Abu Dhabi.

As part of a deal with Russia and other non-members, the Organisation of the Petroleum Exporting Countries is reducing output by about 1.2 million bpd from Jan. 1, 2017, until March next year.

High compliance with the deal, and much-reduced output in the exempt countries, pushed supply lower earlier in the year.

But extra Libya and Nigerian production has prompted output to rise since May, and adherence has slipped in some other countries.

July’s biggest rise came from Libya, where output, curbed by years of conflict and unrest, rose to an average of more than 1 million bpd. Production remains short of the 1.6 million bpd Libya pumped before its 2011 civil war.

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