The recovery of crude production from Libya is undermining Opec’s efforts to curb its output as the African nation pumps unabated.
Total crude production from the Organisation of Petroleum Exporting Countries in July rose 210,000 bpd from June to reach 32.87mn bpd, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data.
Libya – which along with Nigeria is exempt from making cuts as it seeks to restore output lost to internal strife – led those gains, adding 180,000 bpd. Production rose to 1.02mn bpd, the highest level since June 2013, according to data compiled by Bloomberg.
Opec began production cuts in January to reduce swollen global inventories and bolster the price of oil, which is still stuck at around half its 2014 level. In May, Opec and its partners, including Russia, extended their agreement through March 2018 because the oil market had failed to rebalance.
A ministerial meeting last month in St Petersburg didn’t modify the terms of the deal, even as oil prices remain near $50 a barrel amid scepticism the agreement is working. Libya was invited to present its outlook for its production recovery to the meeting, stoking speculation it would be asked to limit its output.
Opec’s biggest producer, Saudi Arabia, increased output by 30,000 bpd to 10.05mn bpd in July. Production in the UAE also increased by that amount, to 2.93mn bpd.
Compliance, which was high in the first months of the pact, has slipped as the expected crude-price recovery fails to materialise. The 12 Opec countries bound by the deal were 86% compliant with their pledges, the survey found. Counting Libya and Nigeria, total Opec output remained almost 1mn bpd above the target set out in the November 30 agreement, putting the group only about 27% of the way toward its goal.
Representatives of some Opec and non-Opec nations will meet on August 7-8 in Abu Dhabi to discuss why some of them are falling behind in their pledges to cut production.
Total crude production from Opec Countries in July rose 210,000 bpd from June to reach 32.87mn bpd, according to a Bloomberg survey