OPEC Output Sets Record

OPEC Output Sets RecordOPEC Output Sets Record

OPEC's oil output is likely to reach its highest in recent history in September, a Reuters survey found on Friday, as Iraq boosted northern exports and Libya reopened some of its main oil terminals.

The increase comes despite lower output in top exporter Saudi Arabia and this week's agreement by the Organization of the Petroleum Exporting Countries in Algeria to limit supply to support prices, its first such decision since 2008.

Supply from OPEC has risen to 33.60 million barrels per day in September from a revised 33.53 million bpd in August, according to the survey based on shipping data and information from industry sources. The rise in output could add to skepticism about OPEC's ability to allocate its new production target of between 32.50 million and 33 million bpd, a task ministers left until a meeting in November. Oil rallied towards $50 a barrel on Thursday but was trading near $49 on Friday.

In September, the increase was led by Iraq and Libya. Iraqi state oil firm SOMO and Iraq's semi-autonomous region of Kurdistan began jointly exporting crude from the Kirkuk oilfield again. This lifted Iraqi supply to market to 4.43 million bpd in September, according to the survey. Supply in Iran, OPEC's fastest source of production growth earlier this year after the lifting of sanctions, has held steady this month as output nears the pre-sanctions rate. Iran is seeking investment to boost supply further.

In Libya, the National Oil Corporation opened three previously blockaded ports, allowing AGOCO, an NOC subsidiary that operates mainly in eastern Libya, to boost output.

Supply in Saudi Arabia has edged down from the record high reached earlier in the summer, sources in the survey said.

 Russia's Assumption

Russia is sticking with an assumption that oil will average $40 a barrel in the next three years and will not take a bait by revising its budget outlook after a preliminary agreement by OPEC on its first production cut in eight years, according to Finance Minister Anton Siluanov.

While crude is trading near $50 after Wednesday’s announcement, heading for the first September increase since 2010, “We know prices are adjusted after such statements,” Siluanov told reporters in Russia’s Black Sea resort of Sochi. The price of Russia’s main export blend Urals used to calculate the country’s budget “was and remains” at $40 a barrel, he said.

“You think it’s stabilized?” Siluanov said. “We need to see how realistically the decisions will be implemented.”

Although the world’s biggest energy exporter has signaled it’s willing to join efforts with OPEC to control global supply, it is on course to pump oil at a post-Soviet record in September, adding as much as 400,000 barrels a day to the country’s output. The surprise deal, which will see OPEC reduce production to a range of 32.5 million to 33 million barrels a day, sent oil surging more than 5%.

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