OPEC needs to reduce crude output by at least 500,000 barrels a day, Libya’s governor to the group said, the first time since prices plunged into a bear market that a representative from a member nation has suggested how much production should be cut.
Oil markets are oversupplied by about 1 million barrels a day, Samir Kamal, Libya’s OPEC governor, said by e-mail today. His comments reflected personal views, not the official Libyan position, he said. Libya shouldn’t be expected to reduce its own oil output because the country is still struggling to restore production that has been disrupted for more than a year by political conflict, he said.
“I would like OPEC to cut production by at least half a million, as all studies indicate the need for that” because of the increasing production from outside the Organization of Petroleum Exporting Countries, he said.
Brent crude, a benchmark for more than half of the world’s oil, has tumbled about 25 percent since June, trading for $86.11 a barrel on the London-based ICE Futures Europe exchange at 6:04 p.m. local time. Banks including BNP Paribas SA and Bank of America Corp. predict the price rout may be over, in part because they expect OPEC to reduce supply. The U.S. is pumping the most oil in almost three decades and Russia’s output is near a post-Soviet record.
OPEC’s biggest producers responded to the slump in oil by cutting their export prices, prompting speculation that they will compete for market share rather than reduce supply. Saudi Arabia, the world’s biggest crude exporter, and other large producers in the group haven’t signaled that they will push for a cut at a planned OPEC meeting on Nov. 27 in Vienna.
Political Schisms
Libya, holder of Africa’s largest crude reserves, is producing 800,000 barrels a day, compared with 215,000 barrels a day in April when oil ports were shut by rebels seeking self-rule in the eastern region, according to state-run National Oil Corp.
The country’s current output is still half what it was before the 2011 rebellion that ended Muammar Qaddafi’s 42-year rule. Political schisms and violence have intensified amid a lack of central authority since his ouster and the chaos has undercut efforts to restore production to pre-2011 levels.
“We should not be expected to cut our production, which we are struggling to bring to the level of one million” barrels a day, Kamal said. Libya was out of oil markets for almost a year and faces budget deficits, he said. Other OPEC members have said they “will make room for Libyan production.”
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