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Output of OPEC Oil Jumps High

2017-08-05 | 10pm

According to a survey conducted by Reuters, the output of OPEC oil has increased this month by 90,000 barrels per day (bpd) which is a 2017 high. It was headed by a further recovery in supply from Libya. This is one of the countries which has been exempted from a production-cutting deal. With dip in supply from Saudi Arabia as well as lower Angolan exports, there will be good boost to the adherence of OPEC for supplying curbs to 84 percent. Although, in the month of June there was revision of 77 percent,  as compare to have fallen from levels above 90 percent earlier in the year. With the extra oil from Libya stands for supply from the 13 OPEC members which is originally part of the deal that has risen far above their implied production target. Due to conflict, production is curbed in Libya and Nigeria and they were exempt from the cuts. Increase in Libyan and Nigerian output enhanced the challenges of the OPEC-led effort of getting rid of excess supply on world markets. On July 24, ministers address this issue in a meeting to cap Nigerian output, whereas talks are being held for next week on improving compliance. A source from OPEC stated regarding compliance talks stated, “There is a need to align all countries to achieve full compliance.” According to a clause of deal with Russia and other non-members, the Organization of the Petroleum Exporting Countries is all set to minimize the output by about 1.2 million bpd from Jan. 1, 2017 until March next year. Earlier in the year, there is lower supply due to high compliance with the deal, and much-reduced output in the exempt countries. However, there was rise in output since the month of May due to extra Libya and Nigerian production. In the month of July, the biggest rise came from Libya. The output has been curbed by years of conflict and unrest, which leads to the increment to an average of more than 1 million bpd. In the month of June and July, Iraqi supply has been revised up where the output has edged higher. There is increment in supply in the United Arab Emirates, Gabon and Ecuador. On the countries having lower output, Angola had the biggest decline with the export of 50 cargoes, two less than in June. There is expectation of increment in volumes in the month of August. In the month of June, there was increase in Nigeria, but less in July due to a force majeure on Bonny crude exports. In case, the exports attained the planned rate of  at least 2 million bpd then could resume next month. According to the survey, the top exporter Saudi Arabia pumped 50,000 bpd less, whereas output in June was revised higher which is just above its OPEC target. Last year announcement of OPEC’s production target of 32.50 million bpd is in accordance with the low figures for Libya and Nigeria. In the month of July, the Libyan and Nigerian enhances the mean OPEC output with average of 32.85 million bpd, which is about 1.1 million bpd above its supply target. In the month of July, with the addition of Equatorial Guinea total OPEC production has reached 33.0 million bpd. .