Oil drops as Saudi produces above output cap

Lucy Hill
July 12, 2017

Russia's Energy Ministry has no objections to inviting new members to the Joint OPEC-Non-OPEC Ministerial Monitoring Committee due on July 24 in Russia's St. Petersburg, Minister Alexander Novak said Monday.

Kuwait said on Sunday that Nigeria and Libya had been invited to the meeting and their production could be capped earlier than November, when OPEC is scheduled to hold formal talks, according to Bloomberg.

There are signs of resurfacing of problems in the Niger Delta that could once again cut the Nigerian production of 1.5 million barrels by half.

Brent crude futures, the global benchmark for oil prices, were at $46.80 per barrel, up 9 cents, or 0.2 percent, from their last close.

OPEC and Russian Federation are leading the effort to stabilize crude oil prices which have more than halved since 2014.

Optimism about crude oil demand in the coming weeks has helped prices to recover somewhat, but the sustainability of the improvement is highly uncertain. To make matters worse, the supply of oil has dropped by about 0.7 million barrels a day is expected to make a serious spike in the prices of oil by the end of fourth quarter of this year.

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A jump in output in Nigeria and Libya, where output had been limited by conflict, has weighed on oil prices.

However, it was observed that both countries have boosted production which puts a heavy weight on prices worldwide and this triggered the goal of including them in the talks. Nigeria's crude oil production was at 1.2 MMbpd in August 2016.

Kachikwu has said that Nigeria was not opposed in principle to joining OPEC's production cap, but would have to wait and see if production returned to acceptable levels. On July 10, 2017, Libya stated that it would attend the meeting on July 24, 2017.

USA crude oil futures were yesterday up 0.7 per cent at $44.51 per barrel, while Brent crude futures rose 0.6 per cent to $47 per barrel.

Still, OPEC delegates believe that bringing the two countries or one of them into the discussion would at least result to being able to ask these to cap their output. "Deepening the reductions under the current agreement is not on the agenda", Almarzooq said.

Other reports by TheDailyFarc

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