Libyas continued dramatic recovery from civil strife pushed OPECs July output to yet another 2017 high, with the bloc producing 32.82mn bpd, according to the latest S&P Global Platts OPEC survey
Libya, exempted from OPEC production cuts that began January 1, averaged 990,000 bpd in July, up 180,000 bpd from June. Fellow exempt member Nigeria averaged 1.81mn bpd, a 30,000 bpd increase on the month, according to the survey. The two exempt countries, along with increased output from Saudi Arabia as the peak summer air conditioning season is now in full swing, have sent OPEC's collective output about 920,000 bpd above its nominal ceiling of around 31.9mn bpd. Saudi Arabia produced 10.05mn bpd in July, according to the survey. Not including Libya and Nigeria, compliance among OPEC's 12 members with quotas under the production cut agreement remains robust at 114 per cent, down slightly from 116 per cent in June, based on an average of January through July output. That illustrates the challenge OPEC faces in rebalancing the market through its output deal, which also involves 10 non-OPEC producers, as the two exempt countries' recoveries, tenuous though they may be, threaten to undo a large portion of the group's collective cuts.
Saudi energy minister Khalid al-Falih in St Petersburg last month said there was room in the market to absorb 800,000-1mn bpd of growth from the OPEC/non-OPEC bloc, including Libya and Nigeria. He pointed out that demand growth forecasts for 2018 range between 1.4mn and 1.6mn bpd, while the US Energy Information Administration has projected US production to increase 600,000 bpd.
While collective compliance with the cut agreement is strong, results among individual countries are still uneven. OPEC's second largest member Iraq grew production slightly to 4.48mn bpd in July, remaining the least compliant country in terms of output above its quota, which is 4.35mn bpd. Iran, OPEC's third largest producer, also had a slight increase in output to 3.82mn bpd, just above its quota of 3.80mn bpd under the deal, as its barrels in floating storage rose, according to the survey.
UAE oil production likewise rose in July to 2.89mn bpd, above its quota of 2.87mn bpd. Ecuador, which could no longer afford to continue with production cuts, its oil minister said on state television last month, saw a slight rise in output in the month to 530,000 bpd, also above its quota of 520,000 bpd.
