High oil output for OPEC amid production cut in Iran

High oil output for OPEC amid production cut in Iran

High oil output for OPEC amid production cut in Iran

/ Financial News / Sunday, 16 September 2018 08:50

Crude oil production in OPEC countries rose in August despite a sharp decline in Iran's production, subject to trade sanctions, thus warning of economic and geopolitical uncertainties in the world.

Member countries of the Organization of the Petroleum Exporting Countries pumped 32 565 million barrels per day (bpd) in August - an increase of 278 000 barrels per day from July, according to a survey by Reuters.

Production rebounded sharply in Libya, after falling in July. It has also increased in Iraq, Nigeria and to a lesser extent in Saudi Arabia. This more than offset a sharp decline of 150 000 barrels a day in Iran, a country hit by new trade sanctions from the United States. As for Venezuela's production, it has continued to erode amidst serious internal disturbances.

Supply forecasts have also been revised: non-OPEC production has decreased this year but should rise higher than expected next year.

In its monthly oil report, OPEC has also slightly revised downward its estimate of the increase in demand for crude oil this year and for 2019. It should increase by 1.62 mbd to reach a global demand of 98.82 mbd in 2018. In both cases, it’s the demand from Latin America and the Middle East which has been revised downward.

The organization maintained its growth forecasts for the global economy (at + 3.8% in 2018 and + 3.6% in 2019) while underlining a downward “risk” fueled by several factors: monetary tightening, financial weakening of some countries, increased trade tensions or geopolitical problems.

“For the future, economic uncertainties - and therefore questions about global oil demand - as well as geopolitical tensions, will have to be taken into account to maintain a balanced market in the coming months,” the cartel indicated.

OPEC and its non-cartel partners, including Russia, agreed at the end of June to increase their production, after a previous agreement at the end of 2016 to limit their supply by aiming to raise prices. Participants in the agreement “will continue their contribution to the stability of the market,” the organization guarantees.

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