OPEC's oil output hits a 2017 high, another setback for its deal to pump less

 

 Essam Al-Sudani | Reuters

People work at the Halfaya oilfield in Amara, southeast of Baghdad, Iraq.

https://www.cnbc.com/2017/08/10/opecs-oil-output-hits-a-2017-high-in-july.html

• OPEC's oil output rises to the highest level since December, the month before the cartel started cutting output.
• A production recovery in Libya and Nigeria drives the gains last month.

OPEC raised its collective oil output for a fourth-straight month in July, another sign that it is struggling to stick to a deal to pump less.

OPEC output jumped by 173,000 barrels a day to nearly 32.9 million barrels, according to independent sources cited by the group Thursday in a monthly report. That was the highest level since December, the month before the cartel began enforcing an agreement to limit its output in a bid to rebalance the market after three years of oversupply.

OPEC officials met earlier this week in Abu Dhabi to discuss how to improve compliance with the deal but didn't announce any clear steps.

The producer group has partnered with nonmembers, including Russia, since January to keep 1.8 million barrels a day off the market in order to shrink global crude stockpiles and boost prices. Rising output from U.S. drillers and OPEC members Libya and Nigeria, which are exempt from the deal, has frustrated that effort.

The oproduction recovery in Libya and Nigeria continued in July as the African nations restored output sidelined by civil conflicts.

Libya's daily output rose above 1 million barrels last month, up more than 150,000 barrels a day.

Nigeria hiked daily production by about 34,000 barrels, reaching about 1.75 million barrels a day. Nigerian officials agreed last month to consider production limits once the country hits 1.8 million barrels a day.

Saudi Arabia, the group's top producer and de facto boss, pumped above the limit it agreed to last winter, producing 10.07 million barrels a day. The kingdom has cut production well below its quota throughout much of the year, helping to offset weak compliance from other members. The rise is likely due in part to seasonal factors, as the Saudis burn crude to meet higher electricity demand in the summer.

Still, Saudi Arabia and Russia last month warned they would not tolerate cheating and took a tough line with producers.

Two of the laggards, Iraq and the United Arab Emirates, reduced output in July, but were still pumping above their quotas.

The world's appetite for oil will reach 96.5 million barrels a day this year and 97.8 million barrels a day in 2018, according to OPEC's latest assessment.

OPEC believes interest rates in developed nations will rise gradually from current low levels, supporting borrowing and economic growth in developing countries. The cartel also sees a reduction in geopolitical tensions in some pockets of the world boosting growth.

"Taken together, this will allow the global economy to enter the coming year with a firm basis to support better-than-projected growth in 2018," OPEC said in the report.