IEA Report: September oil output at record high

IEA Report: September oil output at record high

Elisa Maria Giannetto
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Algiers, Istanbul, Washington. The three global meetings have provided the international community with plenty of opportunity to agree on oil output cuts, but the International Energy Agency's data does not corroborate any such willingness

Oil output is rising as demand shrinks, prices are dropping and stocks are piling up. This worrisome trend is confirmed by the International Energy Agency (IEA) in its report for October. The trouble will continue at least until spring of 2017, the minimum possible time required for oil stockpiles to be sold off. In response, the organization has urged OPEC (Organization of the Petroleum Exporting Countries) members to follow through on pledges to cut production made during the bloc's 28 September informal meeting in Algiers. The report shows that OPEC members’ output did not slow down during September as expected, but, on the contrary, hit a record 33.64 million bpd. Iraq stepped up exports from its northern region to the highest levels ever, and Libya reopened some of its main oil terminals. The situation has been exacerbated by the increased output of non-OPEC members, first and foremost Russia, which has reported a record output for the post-Soviet era of 11.1 million bpd during the same month. Action must be taken to contain output, as OPEC Secretary General Mohammed Barkindo agrees. At the annual meetings of the International Monetary Fund (IMF) in Washington D.C., Barkindo stated: ''Due to the slump in oil prices, OPEC producers have lost over 1 trillion USD in revenue over the past three years. Investments in the oil industry shrank more than 26% last year and are projected to drop by another 22% this year''. He went on to say that the outlook for 2017 also looks bleak: ''For the first time in recent memory, OPEC is not only facing three years in a row of low crude prices, but also declining capex, especially in the upstream business''. Of course forecasting is never easy. The IMF and World Bank have also failed to make predictions of any certainty on when the oil market will restabilize, and the erratic behavior of certain countries doesn't help either. Such is the case of Iran and Iraq, both of which have declined to participate in the informal talks between OPEC and non-OPEC members set to take place during the World Energy Congress. Then there is Russia, which has been a staunch supporter of cutting output but now finds itself with the head of Rosneft refusing to do so outright.