Oil prices fall as OPEC+ looks to raise production in October

OPEC+ will likely begin to reverse its production cuts in October, six OPEC+ sources told Reuters on Friday.

If OPEC+ decides to start the process of raising production in October, it will be largely offset by OPEC member Libya’s significant oil output losses that began this week.

Brent crude reacted violently to the anonymous domestic news, falling more than 1.5% in mid-day trade, although initial losses had already started to pare at the time of writing.

So far, Libya’s output has fallen by 700,000 bpd following the shutdown of oil fields by Libya’s eastern government as political infighting between two Libyan groups vying for power intensifies. The significant drop in Libyan production gives OPEC+ room for other members to begin the slow process of increasing crude output without changing the total number of barrels entering the market.

Eight OPEC+ members are set to increase crude output by 180,000 bpd in October as part of the group’s existing plan to unlock voluntary cuts of 2.2 million bpd. OPEC+ said, however, that its plan to reverse the cuts depends on oil markets balancing.

The anonymous sources also told Reuters the group hopes the US Federal Reserve will cut interest rates in mid-September.

Both WTI and Brent traded lower on the day, with WTI trading at $73.92, down $1.99 (-2.62%) per barrel. Brent crude was trading at $78.81, down $1.13 (-1.41%) per barrel.

Before the situation in Libya developed, which took hundreds of thousands of barrels of crude off the market every day, it was a widely accepted position that OPEC+ could not abandon the millions of barrels of production cuts, with countries outside the group such as The United States and Brazil continue to increase production.

By Julianne Geiger for Oilprice.com

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