While last week's OPEC Algiers meeting was supposed to, eventually, lead a production cut, we warned that over the next two months the most likely outcome would be a boost in production ahead of the Vienna meeting where, in an ideal world, OPECs members would somehow agree to trim production despite vocal resistance already emerging from Iraq. Sure enough, we didn't have to wait long and earlier today Iran's IRNA news agency reported that International Affairs Director of National Iranian Oil Company (NIOC) said Iran is presently exporting 2.2mbpd of crude oil but the figure could be well increased to 2,350,000 bpd.
Talking to reporters on Sunday, Mohsen Ghamsari also commented on Iran's ability to increase production and export rates of its crude oil now that it has been excluded from oil freeze plan. Noting that Iranian refineries use 1.8 mbpd of crude oil, he said surplus production would be allocated to exports. On the crude oil exports to Europe, he said that 600 to 650 barrels of crude oil is exported to Europe per day. He reiterated that the average amount of crude oil exports was 2mbpd during the first half of current Iranian calendar year (started March 20, 2016) and the amount of gas condensates exports was 500,000 bpd during the same period. As Iran was excluded from the Algiers plan, Ghamsari said that Iran would be able to increase its crude oil production to 4.2mbpd which is now 2,650,000bpd.
It wasn't just Iran: a Libyan National Oil Company official said that the country's crude oil production rose to 500k B/d, adding that Libya crude output would reach 600k b/d at end-Oct., Ibrahim Al-Awami, head of National Oil Corp.’s oil measurement department, says by phone. Indicatively, the country’s production was 485k b/d last wk
Adding fuel to the fire, Morgan Stanley's skeptical oil analyst Adam Longson released a note overnight in which he said that Algiers has only added to the uncertainty for oil markets adding that "in reality, the headline agreement from OPEC only increases uncertainty. For now, optimism has returned and the market will anxiously await any confirmation of the agreement or additional non-OPEC participation. However, the risk of disappointment is high, and fundamentals remain challenging / unchanged in the interim.
Some more points from Longson:
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