OPEC oil production continues to rise due to Libya and Iraq,...

OPEC oil production continues to rise due to Libya and Iraq,...
OPEC oil production continues to rise due to Libya and Iraq,...
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© Reuters. Reuters survey: OPEC oil production continues to rise due to Libya and Iraq

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From Alex Lawler

LONDON (Reuters) – OPEC oil production rose for the fourth month in October, according to the results of a Reuters survey, due to the restart of more Libyan facilities and the increase in Iraqi exports, which nullified the impact of the full commitment of the rest of the members to the agreement to reduce the supply led by the organization.

According to the survey, the 13-member Organization of the Petroleum Exporting Countries pumped an average of 24.59 million barrels per day over the course of October, an increase of 210,000 barrels per day over September and in a new boost from the lowest level in three decades recorded in June.

It retreated under the weight of an increase in OPEC supply and a new blow to demand from the growing infection with the Corona virus, to lose crude eight percent in October, approaching about $ 37 a barrel. Some analysts say this is putting pressure on OPEC and its allies, known as the OPEC + group, to postpone the supply increase scheduled for January 2021.

“Demand for oil is not supportive at the moment … at the minimum, OPEC will have to extend its current production levels until the end of March,” said Stephen Brennock of BPM brokerage.

OPEC + cut an unprecedented 9.7 million barrels per day, equivalent to 10 percent of global production, as of May, in light of the pandemic that hit demand. Since August, the group has pumped more, having reduced the amount of the cut to 7.7 million barrels per day, of which OPEC’s share is 4.868 million barrels per day.

A further increase of 2 million bpd is set to begin in January, although Saudi Arabia and Russia favor continuing the cuts at their current levels, OPEC sources say.

In October, the commitment of the bound OPEC countries to the reduction agreement reached 101 percent of the reduction pledged, according to the survey, that is, unchanged from September.

Libya and Iraq

The October increase means OPEC is pumping about 2.2 million barrels per day above the June figure, which was the lowest since 1991.

Libya’s production is on the rise after Khalifa Haftar, commander of eastern Libyan forces (the Libyan National Army), said on September 15 that his forces would lift their blockade of oil export facilities, which had been struck for eight months.

The survey shows that production increased by 250,000 barrels per day in October, a faster rate than some analysts and OPEC officials had expected.

The second largest increase came from Iraq, which increased exports from southern ports. But the percentage of commitment remained about 100 percent, which is more than what Iraq achieved in previous OPEC + agreements.

Saudi Arabia, the world’s largest oil exporter, has kept production stable, and so has Kuwait, according to the survey.

There has been little change in Iran’s supply, which is also excluded from OPEC’s cuts, after an increase in September despite US sanctions. But exports fell slightly in October.

In terms of OPEC members who cut production, the biggest cut came from the UAE, which was pumping above its share in August. Industry sources said the cut indicated that the UAE was still compensating for the August increase.

Supplies of Venezuela, the third OPEC member exempt from supply cuts, also declined.

The OPEC survey monitors the supply received by the market based on shipping data provided by external sources, Refinitiv Eikon flows data, information from trackers of tankers such as Petro-Logistics and Kepler, information from sources in oil companies, OPEC and consultants.

(Reported by Ahmad Ghaddar and Rania El Gamal; Prepared by Ahmed Elhami for the Arabic Bulletin)

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