The International Energy Agency (IEA) warned this week that the members of the Organization of Petroleum Exporting Countries (OPEC) commitment to the output cut fell to six-month lows in June, according to EFE.
In its monthly oil market report, the IEA stated that compliance levels stood at 78 percent, down from 95 percent recorded in May, and remarked that even non-OPEC producers that pledged the deal (like Russia) recorded higher compliance levels at 82 percent.
Last November, OPEC’s 14 members and ten other major producers, including Russia, agreed to curb output by 1.8 mbd as of January, a measure in force until March 2018, to try to put an end to low oil prices.
The IEA, which confirmed that prices have remained below the $50 mark since early-June (completely below this mark over the last days), indicated that each month there are new obstacles that hinder the awaited market balance.
June brought two of these obstacles: the high levels of non-compliance with the pledged production cut goals and a sharp increase in Libyan and Nigerian output (which although are OPEC members were exempted from the measures), by over 700,000 barrels per day, as compared with the previous month.
In the end, two-thirds of the output curb efforts achieved by the organization were wiped out thanks to these two countries and its global production increased by 340,000 barrels per day in June to 32.6 million, its highest in 2017.
The agency now forecasts consumption will rise by 1.4 million barrels in 2017 (to 98 million per day) or 100,000 more than estimates indicated last month. Levels should increase at a similar level in 2018, taking the average production levels to 99.4 mbd.