OPEC pumps more oil in July de­spite pledge to cut out­put, says IEA

Muscat Daily - - BUSINESS -

Paris, France - OPEC pumped more oil in July as global oil sup­plies rose for the third straight month, the In­ter­na­tional En­ergy Agency (IEA) said on Fri­day, giv­ing fig­ures that cast fur­ther doubt on the car­tel’s pledge to cut out­put to raise prices.

In its monthly re­port on the global oil mar­ket, the IEA said, how­ever, that it be­lieves the sup­ply glut is eas­ing, partly be­cause de­mand is grow­ing faster.

‘There would be more con­fi­dence that re-bal­anc­ing is here to stay if some pro­duc­ers party to the out­put agree­ments were not...show­ing signs of weak­en­ing their re­solve’, the IEA said.

OPEC and a num­ber of other pro­duc­ers in­clud­ing Rus­sia agreed late last year to cut pro­duc­tion to ease over­sup­ply and sup­port the price of crude. In May they ex­tended those cuts into 2018.

How­ever the ef­fort has been un­der­mined by a num­ber of coun­tries fail­ing to hon­our their pledges to reduce out­put.

‘The com­pli­ance rate with OPEC’s out­put cut fell again in July to a new low of 75 per cent from June’s re­vised fig­ure of 77 per cent’, said the IEA.

For the non-OPEC coun­tries that joined the pact, the com­pli­ance rate edged up to 67 per cent, the IEA said.

It found that the 22 coun­tries bound by the pact are pro­duc­ing about 470,000 bar­rels per day (bpd) in ex­cess of their com­mit­ment, while global out­put was around 500,000 bar­rels higher in July than one year ago.

‘If re-bal­anc­ing is to be main­tained, the pro­duc­ers that are com­mit­ted to see­ing the task through to March 2018 need to con­vince the mar­ket that they are in it to­gether’, said the IEA.

‘It is not en­tirely clear that this is the case today’.

Saudi Ara­bia and Iraq, OPEC’s top two pro­duc­ers, vowed on Thurs­day to strengthen their com­mit­ment to the pro­duc­tion cuts. While Saudi Ara­bia met its pro­duc­tion lim­its in July, Iraq only made one-third of the cut it had pledged, ac­cord­ing to the IEA re­port.

The IEA found that global oil sup­ply rose by nearly half a bil­lion bar­rels per day in July to 98.16mn bpd.

It raised its fore­cast for growth in de­mand this year, to 1.5mn bpd, to an av­er­age daily de­mand 97.6mn bpd.

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