The International Energy Agency is urging OPEC countries to swiftly deliver on promised production cuts if they want to see a sustained increase in oil prices that will also help shore up their economies, The Associated Press reports.
In its monthly report released this morning, the IEA says production from OPEC nations hit a record high in September of 33.64 million barrels a day.
Iraq produced more oil than ever, while Libya reopened oil ports. Russia, which is not an OPEC member, also contributed to boosting global oil supply levels.
While supply is running high, demand is slowing along with the global economy—a combination that could pressure oil prices, the IEA says. The agency forecast that the market will remain oversupplied through mid-2017 if OPEC doesn’t enact last month’s pledge in Algeria to cut supply to between 32.5 million and 33 million barrels per day.
“OPEC has abandoned its free-market policy set in train nearly two years ago. Global oil inventories are far too high—in the view of some producers—and they aren’t being worked off nearly fast enough,” the IEA says. “The current price of oil has caused discomfort for all producers.”
OPEC countries say the specific details of the overall production cut would be ironed out at a meeting in Vienna Nov. 30.
Timelines and country-by-country breakdowns have still to be worked out, though Iran, Libya and Nigeria may be exempt from the cuts for various reasons. It’s also unclear how much non-OPEC members, notably Russia, are willing to play along. Russian President Vladimir Putin intimated at a meeting in Istanbul on Monday that Russia was ready to support OPEC, which further buoyed oil prices.
Analysts says a failure to push through the planned cuts could well see oil prices sink again.
