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