OPEC’s crude oil production expected to rise

OPEC’s crude oil production is expected to grow to 32.41 million bpd this year from 31.76 million bpd in 2015, with higher Iranian output accounting for most of the increase.

According to the U.S Energy Information Administration (EIA) monthly short-term energy outlook, OPEC’s crude production is to further increase to 32.95 million bpd in 2017.

Oil supply outages averaged 2.4 million bpd across OPEC members in August, up by 100,000 bpd from July, with Nigeria and Libya accounting for most of the crude supply disruptions.

OPEC’s surplus crude production capacity is projected to fall to 1.49 million bpd this year and to 1.35 million bpd next year, from 1.59 million bpd in 2015. Although surplus capacity below 2.5 million bpd points to a relatively tight oil market, the high global oil inventories make the lower surplus capacity forecast less significant, the EIA noted.

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Non-OPEC petroleum and other liquids output is expected to drop to 56.98 million bpd in 2016 and to 56.76 million bpd in 2017, from 57.40 million bpd last year, with the U.S. tight oil production changes significantly affecting total non-OPEC output.

The Administration expects Brent prices to average US$45 per barrel in the fourth quarter this year and the first quarter next year. Global political and geopolitical events may push the prices close to either sides of the US$40-US$50 range, the EIA said.

Meanwhile, with oil prices surging on the ‘one-off’ crash in U.S. inventories, overnight remarks from Iran, largely dashing hopes of any freeze agreement in Algiers at the end of September appear to have been forgotten. However, after two years of a Saudi-led strategy of all-out pumping, adopted to protect market share against the surge in U.S. shale oil, OPEC and Russia are putting cooperation back on the table. Their last attempt to do this a proposal to freeze output in April collapsed in acrimony because of rivalry between Saudi Arabia and Iran.