Libya's oil production rebounds OPEC promises to safeguard supply

Six months ago, Libya’s oil production was suspended and caused internal disputes among OPEC members. At the new OPEC meeting on December 14th, Libya’s oil production may again become the core of the deliberations. The focus of this discussion is no longer Libya's suspension of production, but how to adapt to the rapid recovery of oil production in Libya.

In June 2011, the OPEC meeting failed to reach an agreement on the issue of oil production and broke up in a disagreement. As the most influential member of OPEC, Saudi Arabia demands increased oil production. Subsequently, Saudi Arabia, Kuwait, and the UAE unilaterally decided to increase oil production in order to make up for the decline in market supply caused by Libya's domestic buzz.

At present, there are disagreements among OPEC member states as Libya’s oil production recovers rapidly. OPEC members represented by Kuwait believe that there is still demand in the market. The OPEC member countries represented by Iran believe that under the premise of weak main economic indicators, oil production will be surplus in the first half of 2012 and it is hoped that OPEC member states will reduce production.

The Minister of Petroleum of Kuwait stated that even if Libya's output quickly rises, the market still needs more oil. Angola’s oil minister, Devas Concelos, also believes that OPEC members may not discuss the adjustment of production quotas until Libya's oil production returns to pre-war levels.

In early December, Saudi Aramco raised the price of its oil to Asian customers. This move was interpreted as Saudi Arabia believes that there is no need to cut oil production.

Prior to this, OPEC’s current rotating country ** and Iran’s oil minister Gassem stated that in view of the gradual recovery of oil production in Libya, OPEC members that have already raised production are required to reduce oil production. On December 12, Gassami called again that other OPEC members should make room for the recovery of oil production in Libya.

In fact, the reason why the recovery of oil supply in Libya has had a big impact on the market recently is that most market participants have not predicted that Libya’s oil production will resume at such a rapid pace. OPEC is concerned that the market will experience a situation where supply exceeds demand, and if it does not reduce production, international oil prices will fall.

In June 2011, the International Energy Agency announced the release of 60 million barrels of strategic crude oil reserves in response to Libya's crude oil production cuts. Prior to this, the International Energy Agency had urged OPEC to increase production, but due to opposition from the OPEC member countries represented by Iran, it eventually ran aground.

Since the beginning of 2009, OPEC has maintained an official production quota of 24.845 million barrels per day. According to Reuters’ latest data, due to the increase in oil production in Angola and Libya, in November 2011, OPEC’s oil production hit a new high in three years, and the total supply of 12 member countries reached 30.27 million barrels per day, exceeding the daily rate of 2981 in October. Million barrels of level.

Maria Van der Huven, executive director of the International Energy Agency, stated that in 2012, global demand for OPEC oil is at least equal to the current oil production of the organization.

OPEC Secretary-General Bardrey said during his attendance at the 20th World Petroleum Congress last week that OPEC will actively study the energy reserves of member states and supervise the energy market to ensure a balance between supply and demand. In the event of an emergency, OPEC will endeavor to compensate for the shortage of energy supplies worldwide and try its best to ensure global energy supply. Regardless of how the situation in each country changes, OPEC will shoulder its own responsibility for ensuring global energy supply. Algeria's energy and mining minister Yousef Yusuf said that it will increase energy productivity and put more energy and energy products into the energy market.

This will undoubtedly ease people's concerns about the energy market supply and inject a lot of energy into the world economy. However, the oil-producing countries did not take the initiative to cut oil prices due to the global economic downturn, which also caused some additional concerns.