OPEC Accord Continues
Jan. 3, 2018
At the start of 2017, the Organization of Petroleum Exporting Countries and non-OPEC production cut agreement was implemented to cap oil output levels, reduce global supply and support crude pricing. With the majority of OPEC members included in the agreement apart from Nigeria, Libya and Iran, official monthly production data from OPEC tells us that total oil output from the group was reduced by an average of 620,000 b/d year-on-year, through the first 11 months of the year. Russia was also major contributor, keeping production relatively flat year-on-year at 10.9 million b/d, a 300,000 b/d reduction from November/December 2017 levels.
The exclusion of Nigeria, Libya and Iran allowed production within these nations to rise considerably and offset much of the progress made by the production cut agreement. Crude output from these three nations averaged over 800,000 b/d higher year-on-year through November 2017. This coupled with the surge in US production to the current level of 9.75 million b/d has kept a ceiling on crude pricing and prevented any major gains through 2017. When looking at the year-on-year net change in crude production from OPEC and the US we see output rising about 44,000 b/d on average through 2017.
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