OPEC Should Cut Oil Output, Libya Official Says

OPEC should change course and cut oil supply by 800,000 barrels per day (bpd) or more to prevent an expected return of Iranian exports from weighing on prices, Libya’s OPEC governor said.

The comments underline how the halving of oil prices from $115 a barrel in June on global oversupply is hurting OPEC’s less wealthy members outside the Gulf and suggests the 12-nation group remains divided over the impact of its 2014 policy shift to defend market share, not prices.

“OPEC members, as a unit, need to re-evaluate their strategies,” Samir Kamal, Libya’s OPEC governor and head of planning at the North African country’s oil ministry, told Reuters by email.

They “need to reach an agreement to bring down the production levels by at least 800,000 barrels a day, especially now that an agreement has been reached with Iran which is expected to increase its production”, he said.

A framework deal announced last week to curb Iran’s nuclear work could eventually allow Tehran to boost oil exports, which have been cut by almost half since 2012 due to Western sanctions.

Four years after the ousting of leader Muammar Gaddafi, Libya is struggling with two rival governments. Kamal represents Libya on OPEC’s board of governors, a body that influences but does not decide OPEC policy.

When the producer group last met in November, Libya was among member countries calling for a cut in production.

OPEC meets again on June 5 to set policy. Although they did not oppose the group’s no-cut decision of last year, other non-Gulf OPEC members such as Venezuela and Iran have expressed misgivings about it and sought supply reductions.

A group of 18 African oil producers – many of which are not OPEC members – is lobbying for output curbs to boost prices that it says have fallen to levels that threaten to spark social unrest.

But without support from Saudi Arabia and the other Gulf OPEC members, a rethink is unlikely. Saudi Arabia has increased production to a record high and Kuwait has said OPEC will not change policy at the June meeting.

Source: Reuters


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