OPEC+ is expected to start easing its production cuts in October, according to six sources within the group who spoke to Reuters on Friday.
If OPEC+ moves forward with increasing production next month, the impact will likely be balanced by significant production losses from Libya, which began this week. The news led to a sharp drop in Brent crude prices, which fell by over 1.5% during midday trading, though losses had begun to lessen by the time of writing.
Libya has seen its oil production fall by 700,000 barrels per day (bpd) due to the shutdown of oilfields by Libya’s eastern government. This action is a response to escalating political conflicts between rival groups in Libya. The loss in Libyan output allows OPEC+ to gradually increase production from other member countries without significantly changing the total supply on the market.
In October, eight OPEC+ members plan to raise their crude oil output by 180,000 bpd as part of the group’s strategy to unwind the 2.2 million bpd of voluntary cuts. However, OPEC+ has indicated that this plan is contingent upon maintaining a balance in the oil markets.
Additionally, sources have suggested that the group hopes the U.S. Federal Reserve will lower interest rates in mid-September.
On the trading front, both WTI and Brent crude prices fell. WTI was priced at $73.92 per barrel, down $1.99 (-2.62%), while Brent crude was at $78.81 per barrel, a decline of $1.13 (-1.41%).
Before the Libyan production issues, it was widely believed that OPEC+ would struggle to reverse its production cuts, especially with non-member countries like the United States and Brazil continuing to increase their output.