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International Energy Agency warned that relentless oil pumping will follow if the Organization of the Petroleum Exporting Countries (OPEC) will fail to seal a deal over cutting oil supply.
IEA added that the proposal of reducing oil production would be very difficult. The agency also indicated the large scope of the task proposed.
At a meeting in September, the organization ended with a deal to cut oil production. Alternatively, there will be another gathering on November 30, 2016. The extended conference will focus on allocating production targets to its oil-producing members.
IEA data shows that the reduction in oil supply will be high. In October, the oil market again broke records with an increase in crude production of up to 33.8 million barrels a day. The previous record is just 230,000 barrels a day.
IEA stated that all the members of OPEC, except Saudi Arabia, are pumping crude oil to a level almost reaching their total capacity of production.
In October, the biggest output in production was registered by Nigeria, whereas Iraq valued its production the highest on record.
OPEC is still hoping that oil price will increase in the range of $50 to $60 per barrel. At present, the value of crude lingers around $45 per barrel. If the price increases, other producers like U.S. shale companies will likely resume their operations.
The price of crude oil will not likely perk up as OPEC hopes even if it seals an agreement. This is due to the fact the group is just a part of the oil market entirety. According to IEA, Russia is anticipated to increase its oil output by 230,000 barrels a day later this year. In 2017, the country is expected to add up another 200,000 barrels per day.
In the months to come, even Canada, Brazil, and Kazakhstan will increase their production of oil.
Demand for oil will not likely recover as global growth is still sluggish.
Over a couple of years, the oversupply of oil caused prices to drop globally. In order to defend their stake in the market, oil producers disagreed to cut generation.