Baku, Azerbaijan, Sept.3
By Leman Zeynalova – Trend:
There is no risk of strong rise in OPEC's overall production in coming months, Francis Perrin, Senior Fellow at the Policy Center for the New South (PCNS, Rabat) and at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend.
He was commenting on the latest Reuters survey, showing that OPEC’s oil production for August has increased by 80.000 b/d.
“The month of August has just ended and it is yet a little early to have clear indications about the evolution of OPEC's oil production in this month. We have estimates from Reuters but in the coming days we will get access to other estimates from other independent sources and, a little later, figures emanating from the International Energy Agency (IEA) and from OPEC itself. Moreover all these figures are estimates and there is obviously a margin of uncertainty. It is the reason why some of them can be revised some weeks later,” said the expert.
According to Reuters, OPEC's production rose by 80,000 b/d in August, which means a 0.3 percent increase only, noted Perrin.
“It is not of course a dramatic evolution. In fact this figure for August is the same than the average of several secondary sources (secondary meaning non-OPEC sources) for the month of July. Taking into account all this the first indications are that OPEC's oil production was more or less equal to its July level. But we will have to wait for some more data in order to be more specific.
In any case, if these estimates are right, a rise of 0.3 percent in OPEC's production would not impact the oil markets and prices as world oil demand is increasing even if the size of this increase was revised downwards in the recent period. According to the IEA world demand would increase by 1.1 million barrels per day in 2019. As of now OPEC is meeting its commitments,” the expert believes.
He went on to add that Saudi Arabia wants very much OPEC to succeed as attested by its own record in terms of production over the past months.
“As this country is the leading OPEC producer and exporter - it accounts for a third of OPEC's crude oil production - this stable policy from the Kingdom is very important. According to Reuters we had in August production increases from Iraq and Nigeria. Iraq is on a rising trend for some time and OPEC has integrated this willingness from the Iraqi authorities. Nigeria has a small upwards potential but it depends on political and security issues, especially what happens in the Niger Delta region. But Iran and Venezuela's respective production fell very significantly in 2019 and there is thus no risk of a strong rise in OPEC's overall production in the coming months,” noted Perrin.
The expert pointed out that Saudi Arabia is convinced that there is a significant risk of a fall in oil prices due to the oil, economic and trade environment (relentless increase in US oil supply, slowing down of world economic growth and trade tensions between the US and China).
“For the Kingdom it is thus very important that OPEC and its non-OPEC partners remain very vigilant as far as their production levels are concerned. So far these countries are globally up to the task. According to the Joint Ministerial Monitoring Committee (JMMC), which is monitoring the implementation of the commitments of OPEC and its non-OPEC partners, the overall conformity rate was 134 percent between January and July 2019,” he concluded.
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