OPEC production cut: Is output creeping up?

Published March 15th, 2017 - 09:00 GMT
Saudi Arabia, the de facto head of OPEC, has boasted of its lead position among member states cutting production. (Shutterstock)
Saudi Arabia, the de facto head of OPEC, has boasted of its lead position among member states cutting production. (Shutterstock)

Secondary sources reporting to OPEC said member states operating outside a production deal increased production last month by more than 80,000 barrels per day.

Crude oil prices were moving lower in early Tuesday trading after the Organization of Petroleum Exporting Countries released a market report for March showing how well a move to curb about 1.2 million barrels per day from the market was holding.

The deal was brokered in November and called for a collective ceiling of 32.5 million barrels per day. Secondary industry sources told OPEC economists that, collectively, the 13 members produced 31.9 million barrels per day in February.

Libya and Nigeria are exempt from the arrangement because of the need to steer oil revenue toward national security efforts. Industry sources reported Libyan production declined 111,000 barrels per day as conflict reignites in the so-called oil crescent.

The U.N. High Commissioner for Human Rights said Tuesday it's seen reports of "summary executions, hostage-taking, arbitrary detentions, torture, as well as widespread raids of civilian homes" in the conflict zones in Libya.

Offsetting the decline from Libya, Nigeria reported a gain of 58,000 barrels per day. Iran has allowances for production gains as it seeks to retake a market share lost to sanctions and secondary sources reporting an increase from January of 36,100 barrels per day to 3.8 million barrels per day.

Saudi Arabia, the de facto head of OPEC, has boasted of its lead position among member states cutting production. Secondary sources reported a Saudi decline of 68,100 barrels per day, though the country directly reported a gain of more than a quarter million barrels per day to move the kingdom back over 10 million barrels per day.

"While output fell last month (based on secondary sources), it is a clear signal that the Saudis do not want to carry the brunt of the OPEC cuts forever," Phil Flynn, a senior market analyst for the PRICE Futures Group, told UPI.

Iran and Libya did not offer direct communication to OPEC for February.

By Daniel J. Graeber


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