Oil Prices Surge To Near 2017 Highs As OPEC Output Falls In October

OPEC Output Falls by 80K barrels Per Day

Oil prices continued to rise over the first part of the week fueled by the latest data which shows that production among OPEC members fell over October. A survey compiled by Reuters shows that oil output among the OPEC bloc declined by 80k barrels per day over the last month mainly driven by a fall in exports from northern Iraq.

The fall in exports from Iraq topped 120 barrels per day over the month as Iraqi forces re-established control of oil fields which had been in the control of Kurdish fighters since 2014. Crude exports from southern Iraq also fell over the first three quarters of the month before recovering in the last week due to a plan put in place to offset the decline in flows from the northern region. This month’s decline is Iraq’s strongest monthly compliance.

OPEC Compliance Rises

The survey also shows that the adherence level among OPEC members (regarding the agreed upon production cuts) rose to 92% over the last months, up from 86% in September. Indeed, Saudi Arabia which is the group’s largest exporter continued to stay below its target level, while Venezuelan output also fell due to the economic depression currently being suffered in the country. Algerian Oil production was also lower over the month as a result of scheduled maintenance in some oil fields according to Reuters. The survey also showed that production among the two-exiled former-OPEC exporters Nigeria and Libya was flat. Overproduction in these two countries pushed OPEC output to a record high in July of this year.

OPEC Expected To Extend Deal At November Meeting

The current OPEC agreement stipulates that output is to be reduced by 1.2 million per day until March 2018. The deal was agreed between OPEC and Russia, a non-OPEC member, and is expected to be extended at the upcoming November 20^th OPEC meeting as both Saudi and Russian leaders are in favour of prolonging the production cuts.

Indeed, alongside the support from political leaders, major oil companies have also been voicing their support for extending the production cuts. Following the severe drop in prices over 2014/2015, oil companies are keen to see prices rise again with many firms planning $50 oil into their near-term budgets.