Increased oil production by Libya and Nigeria combined with increased production by Saudi Arabia lead the group’s total production to increase by 32.6 million barrels per day in June. The group’s production increase, roughly 393,500 barrels per day, comes despite OPEC’s commitment to production cuts that it confirmed in May and recently sought to extend through the first half of 2018. Libya and Nigeria are currently exempt from OPEC’s production cutbacks because their production is, ostensibly, already limited by the internal conflicts plaguing the nations.
OPEC blamed its production increase in June to increased internal demand, and studies show that OPEC’s internal demand has increased across the board, more than tripling since 1980 as a result of population increases and growing economic stability within many of OPEC’s countries. In 1982, OPEC’s internal demand consisted of 18 percent of the group’s production. In 2016 OPEC’s internal demand hit 28 percent.
According to an exclusive report published by Reuters, Saudi Arabia will reduce crude oil shipments to its customers in August by over 600,000 barrels per day due to higher demand within its own borders.
"There is strong demand for our crude but we are sticking to our OPEC commitments," Reuters quoted its source as saying. The source added that crude exports will fall to their lowest level this year in August, a level expected to be around 6.6 million barrels per day.
U.S. WTI futures were trading at $45.71 per barrel as of 12:51 p.m. GMT and Brent crude futures were at $48.10 per barrel. A joint ministerial committee between OPEC and non-OPEC countries will meet on July 24 to review output from Nigeria and Libya and to deal with issues relating to compliance with OPEC’s production cut agreement.