OPEC Oil Production Pumped up to 10-Month High in August, 2018
Published Date | 2018 September 17
OPEC (The Organization of the Petroleum Exporting Countries) cartel, consisting of 15 member countries, produced 32.98 million barrels per day in August. This production was last matched in October 2017.Global: OPEC countries have recently started to boost their production. Due to the reversal in supply cuts, crude oil production of OPEC countries in August increased to a 10-month high. The only country that is not included in this contribution is Congo, since it joined the OPEC cartel in June, 2018. The 15-member OPEC cartel contributed to a production of 32.98 million barrels per day in August. This increase in production was last matched in October 2017, when the cartel produced 32.57 million barrels per day. This growth in production will have a positive impact on chemical industries because the chemical end products consume oil as a raw material for their production. If per country production is to be considered, Saudi Arabia being the world’s largest crude oil exporter, produced 10.49 million barrels per day in the month of August. This is far beyond the production that was expected as per the agreement of supply cut in last year. Moreover, if the demand sustains, Saudi Arabia's oil production is expected to rise to the level of 11 million barrels per day. Another major oil producing country is Libya that was the highest contributor. The country hiked its production by 270,000 barrels per day, whereas the overall OPEC production got accelerated by 230,000 barrels per day. The monitoring committee that monitors and oversees the OPEC/non-OPEC supply accord are expected to meet in Algeria at the end of September in order to examine market fundamentals. Furthermore, they are also expected to make potentially recommendations on the output policy. According to the market insight of BlueWeave Consulting, OPEC countries agreed to boost output by returning to 100% compliance with oil output cuts, after months of underproduction by countries including Venezuela and Angola. In addition to this, OPEC countries agreed on June, with 10 other non-OPEC partners to end over-compliance with their production cuts. This was done in order to boost output by a collective 1 million barrel per day to replace barrels expected to get shut down due to reimplementation of US sanctions on Iran and Venezuela's economic free-fall. In this scenario where Saudi Arabia and Russia are strategically taking steps to accelerate their oil production, the increased output in the already oversupplied oil markets is likely to lower down the current oil prices. It is been estimated that Brent oil price will cost at USD 65 and USD 72 per barrel for 2018 and 2019, respectively, under this downside scenario. Thus, the increase in oil production will help allied industries, like chemical industry to foresee future growth as it will help the chemical industries to procure raw material at lower price and gain higher profit margin on the end products.