Baku, Azerbaijan, June 14
By Leman Zeynalova – Trend:
OPEC crude output rose by 290,000 barrels per day in May to 32.08 million barrels per day, the highest level so far this year, after comebacks in Libya and Nigeria, which are exempt from supply cuts, the International Energy Agency (IEA) said in its June Oil Market Report.
Output from members bound by the production deal edged lower, which kept year-to-date compliance strong at 96 percent, said the report.
“For total non-OPEC production, we expect production to grow by 0.7 million barrels per day in 2017 and by 1.5 million barrels per day in 2018,” said the IEA.
While OPEC countries collectively have broadly implemented their cuts, some members have been less than wholly diligent. Iraq has achieved a compliance rate of only 55 percent so far this year, and Venezuela and the United Arab Emirates (UAE) are also laggards, according to the report.
“Meanwhile, two OPEC members not included in the deal have recently seen increases in production: Libya's output has reached nearly 800,000 b/d, a level not seen since 2014, and Nigeria has announced the lifting of force majeure for Forcados exports, potentially making available to the market more than 200,000 b/d,” said the IEA.
IEA analysts believe that if Libya and Nigeria continue to grow their output, these extra barrels dilute the value of OPEC's output accord and contribute to delaying the re-balancing of the market.
On May 25, OPEC member countries and non-OPEC parties, Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and the Republic of South Sudan agreed to extend the production adjustments for a further period of nine months, with effect from July 1, 2017.
The reductions will be on the same terms as those agreed in November.
---
Follow the author on Twitter: @Lyaman_Zeyn