In October, world oil production of 100.7 mb/d remained broadly steady on the previous month, but was 2.6 mb/d higher than a year ago, according to data of the International Energy Agency (IEA) on Wednesday.
The Organization of the Petroleum Exporting Countries (OPEC) crude output saw a month-on-month rise of 200 by thousand barrel per day (kb/d) in October to 32.99 million barrels per day (mb/d), also a rise of 240 kb/d on a year ago, according to IEA Oil Market Report.
The report also stated the outlook for global oil demand growth is largely unchanged since last month’s report, at 1.3 mb/d in 2018 and 1.4 mb/d in 2019. The deteriorating outlook for the global economy is largely offset by the fall in Brent crude oil prices from $86 per barrel early in October to around $70 per barrel at the time of publication.
"The world’s top three oil producers, Russia, the U.S. and Saudi Arabia, are pumping at record levels, holding supply above 100 mb/d even as Iranian output tumbles due to U.S. sanctions and as others post further losses," the IEA highlighted.
Non-OPEC countries accounted for much of October's production increase, although OPEC oil supply was up by 380 kb/d year on year (y-o-y). Crude oil production from OPEC rose to 32.99 mb/d, the highest since July 2017, as record levels from the U.A.E. and Saudi Arabia more than made up for Iranian supply declines.
- Iran sanctions case
The IEA said that as more buyers distanced themselves from Iran ahead of the sanctions deadline, production of Iranian crude oil fell 100 kb/d to 3.34 mb/d in October, down 510 kb/d since May.
At the end of October, the National Iranian Oil Co. (NIOC) had stored roughly 7 million barrels of oil on four tankers moored off Kharg Island. For Iran's upstream sector, the country may have to temper ambitions to boost output capacity if it is unable to drum up enough investment from international oil companies.
"NIOC had hoped the easing of sanctions in January 2016 would lure foreign funds and technology into its oil sector. However, western companies such
as OMW, Wintershall and Maersk Oil have dropped out of negotiations and [Russian state oil company] Zarubezhneft reportedly has abandoned its deals to develop onshore oil fields," according to the organization.
China National Petroleum Corporation is one of the few foreign firms operating in Iran. It is currently developing the North Azadegan field, from which it is repaid in equity crude oil.
In August, the U.S. imposed the first round of economic sanctions on Iran, which mainly targeted the country’s banking sector.
The second phase of sanction targeting Iran’s energy sector officially started on Nov. 5. However, Washington granted temporary waivers to eight of the biggest buyers of Iranian oil, including Turkey, for a 180-day period.
By Gulsen Cagatay