The Organization of Petroleum Exporting Countries (OPEC)’s oil output has increased in June by 280,000b/d to reach a 2017 high as Libya and Nigeria continue to recover production levels. Both countries were exempted from OPEC’s production-cutting deal, according to Reuters.
The recovery of the two countries adds an extra burden on OPEC-led to protect the market from facing a continual inventory glut. If the recovery lasts, OPEC countries might ask the exempt countries to involve into the production deal.
In addition, Saudi Arabia and Kuwait have incurred most of the oil production cuts to make sure that the bloc sticks to its commitment to deduct production by 1.2mb/d. Compliance to the deal will remain in the historical range of supply curbs at a high 92% in June, compared with 95% in May, according to Oil Price.
“The rise in OPEC production will further delay the point at which balance is restored on the oil market,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
In 2016, OPEC announced a production target of 32.5mb/d, which was based on low production rates for Libya and Nigeria. In addition, the target includes Indonesia, and does not include Equatorial Guinea, which is the latest country to join OPEC.