Oil prices fell sharply on Friday as insider reports indicated that OPEC+ might begin increasing its production as early as October. The news, which came from six sources within the organization, led to a more than 1.5% drop in Brent crude during mid-day trading, although prices began to recover slightly by the end of the session. The anticipated production increase by OPEC+ would be largely counterbalanced by a significant reduction in Libya’s oil output.
Libya’s production has decreased by 700,000 barrels per day (bpd) this week, following the shutdown of oilfields by the eastern government amid escalating political conflict between rival factions. As part of its ongoing efforts to gradually unwind 2.2 million bpd of voluntary production cuts, OPEC+ has scheduled an increase of 180,000 bpd for October. However, the group has stressed that its actions will be guided by the current state of the global oil market.
Libya’s production losses have provided OPEC+ with some leeway to adjust production without causing a major shift in market supply. Before the situation in Libya deteriorated, it was widely accepted that OPEC+ would face challenges in reversing its production cuts, especially with non-OPEC countries like the United States and Brazil continuing to boost their output. The anonymous insiders also revealed that OPEC+ is watching the U.S. Federal Reserve closely, with the hope that a potential interest rate cut in mid-September could help stabilize oil prices. By the end of trading, both West Texas Intermediate (WTI) and Brent crude had posted losses. WTI was trading at $73.92 per barrel, down $1.99 (-2.62%), while Brent crude settled at $78.81 per barrel, marking a $1.13 (-1.41%) decline.