Surge in Libya and Nigeria’s oil production could provoke deeper OPEC cuts

OPEC meeting disappoints, gas price surge avoided [Photo: STR Global]
Libya and Nigeria have unleashed a surge of oil output recently even as OPEC tries to shrink the worldwide glut.

Recent developments have stabilised the conflicts that crimped Libya’s crude output for the past few years, and armed factions in Nigeria have slowed attacks on oil fields there.

The two African countries, together with resurgent U.S. shale plays, could raise oil production by 1.6 million barrels a day this year, offsetting almost 90 percent of OPEC’s output cuts by the end of the year, the energy consultancy Rapidan Group says.

That will likely continue to weigh on U.S. oil prices, which have fallen nearly 4 percent to $45.34 a barrel on Wednesday.

Energy research firm Rapidan Group projects surging oil production in Libya, Nigeria and the United States will offset 90 percent of OPEC’s oil production cuts by the end of the year.

Libya’s output has recently climbed to more than 1 million barrels a day and Nigeria produced some 1.7 million barrels a day, up nearly a third from earlier this year.

The easing tension has given the African countries cover to pump an additional 130,000 barrels a day last month, according to a recent survey by Bloomberg.

Rapidan believes they could raise production by another 300,000 barrels a day in coming months as state-run companies repair damaged oil wells and restore failing power plants that supply the electricity to pump crude.

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