Aug. 4 (UPI) — Libya and Nigeria, two countries exempt for OPEC-led efforts to balance the market, continue to threaten the overall objective, S&P Global Platts reported.
The Organization of Petroleum Exporting Countries and a handful of non-member producers like Russia are coordinating to offset the supply-side strains that pushed crude oil prices below $30 per barrel last year through coordinated production declines. Parties to the agreement opted to sideline 1.8 million barrels of oil per day from production, and based cuts and quotas on levels from October.
A survey of output from OPEC members from S&P Global Platts found Libya and Nigeria combined to produce 590,000 barrels of oil above October levels. Both countries are exempt from the agreement so they can steer oil revenue toward national security efforts.
“That illustrates the challenge OPEC faces in rebalancing the market through its output deal, which also involves 10 non-OPEC producers, as the two exempt countries’ recoveries, tenuous though they may be, threaten to undo a large portion of the group’s collective cuts,” the report read.
Libya is moving closer to its target rate of 1.25 million barrels per day and made considerable strides after rival powers in the country agreed to a ceasefire. In late July, however, the U.N. High Commissioner for Human Rights said it was still concerned by ongoing crises in Libya, noting that all parties to a conflict that grew out of the Arab Spring movements are suspected of unlawful killings.
Nigerian crude oil production, meanwhile, continued slow but steady gains in production through July. Platts reported Nigerian crude oil production last month at 1.8 million barrels per day, a level it agreed to sustain during meetings last month for an OPEC monitoring committee. The country, however, has seen a recent uptick in violence, with deaths reported as a result of attacks in the oil-rich Niger Delta by militant group Boko Haram.
“OPEC officials have, at least publicly, dismissed the notion that Libya and Nigeria are undercutting their efforts, saying they are happy for the two countries,” the Platts report read.
Elsewhere, production from Iraq increased in July to the point that Platts characterized the country as the least compliant among OPEC members. Moody’s Investors Service, meanwhile, said Iraq may face economic headwinds because of mounting problems outside the oil sector.
Ecuador last month said it no longer cooperates with the OPEC-led effort because of economic constraints.