EghtesadOnline: Nigeria and Libya, two crude suppliers in OPEC whose output was crushed by domestic conflicts this year, are ramping up again and spelling out what could become the producer club’s biggest challenge as it grapples with a global supply glut.
Libya shipped the most oil since late 2014 in October, while Nigeria’s petroleum minister estimated on Tuesday that his country is now pumping in excess of 2 million barrels a day for the first time since the start of the year. Together, they’ve now added about 800,000 barrels a day since September, reports Bloomberg.
“The pain for OPEC to reach the planned target level will get bigger and bigger as long as Nigeria and Libya continue to increase production,” said Giovanni Staunovo, commodity analyst at UBS Group AG in Zurich. The organization is “talking about cuts but so far what we have seen is a production increase.”
Libya and Nigeria are among producers that matter most in the Organization of Petroleum Exporting Countries’ quest to limit a global glut because conflicts in both nations mean they are expected to receive exemptions from the group’s supply management plan. The more both pump, the greater the pressure on other OPEC nations to make even bigger curtailments of their own if production is to be brought under control. The producer club meets Nov. 30 in Vienna to discuss proposals to limit supply.
Nigeria swelled its production to 2.1 million barrels of crude a day, Emmanuel Kachikwu, minister of state for petroleum resources, told reporters Tuesday in the capital, Abuja, following talks between President Muhammadu Buhari and political leaders from the oil-rich Niger Delta region.
Less than a week ago, Nigeria’s Kachikwu pegged production at 1.8 million barrels a day, as supply disruptions ease. Nigerian production was 1.5 million barrels a day in September and fell as low as 1.39 million barrels in August, according to data compiled by Bloomberg.
Libya’s shipments increased to about 466,000 barrels a day in October, the most since November 2014, ship-tracking data showed. That compared with an average of 233,000 in September and as little as 185,000 in May.
While OPEC Secretary-General Mohammed Barkindo said Monday that the organization and other major oil producers are “on course” to deliver a deal this month, Goldman Sachs Group Inc. said a deal is looking increasingly unlikely, with failure warranting a retreat in prices to the low-$40s.