Oil production is on the rise once again. Recent data has shown that OPEC countries have been collectively pumping more oil than at any time in recent history, fueling concerns that the supply glut may not be over any time soon.
According to its monthly statistical bulletin, the Organization of Petroleum Exporting Countries delivered nearly 32.9m barrels of oil a day in June, 260,000 barrels per day more than in May, an increase of about 1%.
The oil cartel also issued a warning that the UK's recent vote to quit the European Union could choke oil demand across the continent and pointed to the Brexit decision to leave the EU as a risk to global economic growth in 2017 which could potentially send demand for oil lower.
The group downgraded its own global growth forecast for 2017 to three per cent from 3.1 per cent in 2016, while the growth prediction for the EU was cut from 1.5 per cent to 1.2 percent. European oil demand represents around 14.5 per cent of the global total, about 13.74m barrels a day this year, slightly up from the 13.71m barrels a day in 2015.
Nigeria Most Productive
Of all the OPEC members, Nigeria increased its output the most in June. This despite the disruption in supplies caused by the attacks on oil infrastructure carried out by anti-government rebels. Africa's biggest economy continues its comeback, adding almost 100,000 barrels a day to its daily output just last month. It currently pumps about 1.5 million barrels per day.
At the same time, Iran is escalating production in its efforts to regain market share after years of global nuclear sanctions limited its output. Iran produced just over 3.6m barrels a day in June, up 78,000 barrels a day on the prior month.
Oil production in other major OPEC Gulf producers, including Kuwait, Saudi Arabia and the United Arab Emirates, has also increased.
Non-OPEC Supplies Dropping
Non-OPEC oil supplies coming from the US, Russia, and the North Sea are projected to decline by 900,000 barrels a day in 2017, to average 56 million barrels a day. Oil production in these non-OPEC countries are mainly through shale oil drilling and is a more expensive process than regular drilling as is done in OPEC countries.
Oil prices have slipped from around $115 per barrel in the summer of 2014 to around $46 currently. The price has recovered somewhat from lows of $27 per barrel in February this year as shale production eases and the market bets on a pick-up in demand in the second half of the year.
According to some independent energy experts, however, the global supply will not last forever and could drop soon due to a lack of investment.