IEA: Opec+ faces ‘major challenge’ from competitors’ surging output

  • IEA: Opec+ faces ‘major challenge’ from competitors’ surging output

IEA: Opec+ faces ‘major challenge’ from competitors’ surging output

The producer group will meet in Vienna next month.

The production level is right at its quota of 10.31 million b/d under an OPEC/non-OPEC output cut agreement that is scheduled to run through March.

As a result, the Organization of Petroleum Exporting Countries - which has cut production this year to prevent a surplus - is now pumping about 1.7 million barrels a day more than will be needed in the first half of next year, the report showed.

Saudi Arabia's crude output surged 1.17 million b/d to 10.30 million b/d last month, according to official figures self-reported to OPEC.

It was the IEA's last monthly report before the December 5-6 talks among OPEC states and partners led by Russian Federation on whether to maintain supply curbs aimed at buoying prices and balancing the market.

OPEC warned the 2020 non-OPEC supply forecast remains subject to many uncertainties.

The organization in the report trimmed its 2020 forecast for growth in non-OPEC supply to 2.17 million bpd, 40,000 bpd less than the previous forecast.

The key drivers of growth include the US, Brazil, Norway, Russia, Canada, Kazakhstan and Australia, which will be offset by declines in Mexico, Indonesia, Egypt and Colombia. Shale companies have been cutting spending under investor pressure to improve returns, and OPEC Secretary General Mohammad Barkindo said this week that United States shale supply could underperform in 2020.

Crude production rose by 200,000 bpd to a weekly record of 12.8 million bpd, the EIA said in its weekly report.

China was the largest contributor, with demand increasing by 640,000 bpd year-on-year, and the IEA forecasts a year-on-year acceleration in global growth of 1.9 million bpd for the final quarter of 2019.

Nigeria, the African leader in oil production, saw its daily production fall to 1.811 million barrels per day, a drop of 37,000 barrels compared to 1.848 million barrels in September (revised downwards, compared to the previous report, which pointed to 1.859 million).

Since OPEC and its allies agreed on production cuts in late 2016, there have been diverging trends in OECD and non-OECD stocks.

OPEC also says that the most common type of crude Iran sells is Iran Heavy oil, which started the year at $61.77 a barrel, but has lost 11 percent of its value since then. Iran's oil production in October decreased by 18,000 barrels, reaching 2,146,000 barrels per day.