The Organization of the Petroleum Exporting Countries (OPEC) said that OPEC and its ally Russia’s increase in crude oil production in September was enough to make up for the decline in Iranian oil output.
In the much-watched monthly oil market report, OPEC said that its daily crude oil production increased by 132,000 barrels a day in September to an average 32.76 million barrels a day.
OPEC also said in the report that Russia’s daily output increased by 150,000 barrels a day, a new high after the collapse of the Soviet Union, reaching 11.54 million barrels. And total global oil production increased by 230,000 barrels per day to an average of 99 million barrels per day last month.
At the same time, the key member country of OPEC – Iran’s crude oil production continued to decline. According to OPEC data, the daily output of Iranian crude oil fell by 150,000 barrels a day in September to an average of 3.45 million barrels per day.
Nov. 4 is the deadline for U.S. sanctions to stop importing Iranian crude oil. The increase in OPEC and Russian production is enough to fill the gap caused by the decline in Iranian production before the sanctions take effect.
Supply shortage from Iran has fueled global supply tightness. In the past few months, the shortfall from Iran has bolstered oil prices. But OPEC Secretary-General Mohammed Barkindo said at a news conference that the group and its partners were willing to “ensure that the market remains well-supplied” by continuing to increase production.
Oil prices have soared in the past three weeks, after OPEC and its partner producers (headed by Russia) decided not to increase production at a faster rate than planned at the end of September. Brent crude – the global benchmark crude oil – temporarily broke through the $85 a barrel barrier for the first time in roughly four years.
OPEC and 10 producers outside the cartel, including Russia, joined forces for the first time nearly two years ago to control crude oil production by around 2% of global supply, in order to curb the oil oversupply situation. Since the end of 2014, oversupply has been weighing on oil prices. But at the end of June, Saudi Arabia – the actual leader of OPEC and the world’s largest crude oil exporter – and Russia reached an agreement to gradually increase production, in part to limit the rapid rise in prices.
The group lowered its global oil demand growth forecast for this year and next year by 80,000 barrels per day and 50,000 barrels per day. OPEC said that these revisions were mainly due to the slowdown in economic growth in European and Asian industrialized countries and emerging markets in Latin America and the Middle East.