PARIS—The International Energy Agency is urging OPEC countries to swiftly deliver on promised production cuts if they want to see a sustained increase in oil prices that will also help shore up their economies.
In its monthly report yesterday, the global watchdog said production from the Organization of the Petroleum Exporting Countries hit a record high in September of 33.64 million barrels a day. Iraq produced more oil than ever, while Libya reopened oil ports.
Further boosting global supply levels is the fact that production in non-OPEC member Russia hit a post-Soviet record.
While supply is running high, the IEA said demand is slowing along with the global economy— a combination that could pressure oil prices. The IEA forecast that the market will remain oversupplied through mid-2017 if OPEC doesn’t enact last month’s pledge in Algeria to cut supply to between 32.5 and 33 million barrels per day.
“OPEC has abandoned its free-market policy set in train nearly two years ago. Global oil inventories are far too high—in the view of some producers - and they aren’t being worked off nearly fast enough,” the IEA said. “The current price of oil has caused discomfort for all producers.”
At last month’s meeting, OPEC countries said the specific details of the overall production cut would be ironed out at a meeting in Vienna November 30. Timelines and country-by-country breakdowns have still to be worked out, though Iran, Libya and Nigeria may be exempt from the cuts for various reasons.
“Now the real work starts,” the IEA said. (AP)