OPEC: Azerbaijan’s oil output ups

“The massive stockpile overhang is one more indicator, along with the ongoing slump in prices, that Saudi Arabia’s oil strategy isn’t working so far”, said Seth Kleinman, head of energy strategy at Citigroup in London.

Oil prices have lost about 40 per cent in the past year as several OPEC members pump near record levels to defend their market share against rivals such as the U.S. shale industry.

Taking into consideration the addition of Indonesia to its membership, the Organization of the Petroleum Exporting Countries (OPEC) is said to be mulling a 1 million barrels per day (bpd) raise in its production target to 31 million bpd at its December 4 meeting, Bloomberg reports. Oil prices have fallen as a result from around $114 last June to below $50 a barrel.

“The decline is expected, despite the Jan-Sept oil production on Azerbaijan’s oilfield block Azeri-Chirag-Gunashli increased by 4%, compared to the same period of 2014”, the OPEC report says. “It has also provided a challenging market environment for a few higher-cost crude oil production, which has already shown a slowdown”.

The group expects non-OPEC supply next year to fall by about 130,000 bpd, following growth of 720,000 bpd this year, “as almost $200 billion of capex cutbacks this year and next create a gaping supply hole”.

For 2015 though, the report implies a much larger surplus of nearly 1.8 million bpd due to high OPEC production and the still-growing rival supplies that have boosted inventories.

The last time the market faced a similar glut was in the wake of the financial crisis in early 2009.

Saudi Arabia, the driving force behind’s OPEC’s strategy shift, told OPEC it raised production to 10.28 million bpd in October.

In OPEC’s November report, the 12-country producer group kept its forecast for world oil demand growth in 2015, predicting it will rise by 1.5 million barrels per day (mb/d) to average 92.86 mb/d, unchanged from the previous month’s forecast.