OPEC’s crude production climbed to the highest level since 2016 as increases by Saudi Arabia and Libya offset losses stemming from impending U.S. sanctions on Iran.
The group’s 15 members boosted output by 430,000 barrels a day to 33.33 million a day in October, according to a Bloomberg survey of officials, analysts and ship-tracking data. That’s the highest since November 2016, just before the Organization of Petroleum Exporting Countries implemented production cuts to clear a global glut.
Since this summer their policy has reversed completely, to what Saudi Arabia’s energy minister last week described as “produce as much as you can mode.” American sanctions against Iran, which take effect this weekend, are fanning concerns that a shortage could develop before the end of the year.
Saudi Arabia, OPEC’s biggest and most influential member, increased output by 150,000 barrels a day to 10.68 million a day last month, the highest in Bloomberg data going back to 1962. That’s still below the kingdom’s own estimate of its record output, at 10.72 million a day in November 2016.
An even larger gain was seen last month in Libya, which has overcome political feuds and terrorist attacks to reach the highest output level since 2013. The North African nation increased by 170,000 barrels a day to 1.22 million a day.
Iran, which has seen many buyers flee as U.S. sanctions neared, continued to decline and is producing the least crude since 2016. It slipped by a further 10,000 barrels a day to 3.42 million in October, though estimates for September were revised higher.
Russia, which isn’t an OPEC member but cooperated with the group in last year’s supply curbs, is also ramping up again. It hiked production of crude and condensates to a record of almost 11.41 million barrels a day in October, according to a government official who asked not to be identified.
While the producer group and its partners are boosting supply now, the outlook for next year is growing increasingly uncertain.
Last week an OPEC committee signaled that producers might need to restrain output in 2019 as faltering economic growth, especially in emerging markets, weakens demand for fuels.
At the same time, U.S. crude production is continuing to surge as price gains from earlier this year energize shale-oil drillers, threatening to unleash a new surplus. In August, the country overtook Russia as the world’s biggest producer, pumping a record 11.35 million barrels a day, data from the Energy Information Administration showed.
The OPEC coalition will meet for an interim review of markets in Abu Dhabi on Nov. 11, prior to a formal gathering of ministers in Vienna on Dec. 6 to 7.