PARIS -- Oil production from OPEC nations hit a record last month, according to an international energy group, highlighting the cartel's challenge in trimming output to drive up prices.
The International Energy Agency said Tuesday that production from the Organization of the Petroleum Exporting Countries hit a record high in September of 33.64 million barrels a day.
Last month, OPEC agreed to reduce daily output to between 32.5 million and 33 million barrels. The price of crude has gained about 15 percent since that proclamation.
"Now the real work starts," the energy agency said in its monthly report. OPEC has not decided how it will achieve production cuts -- including which countries will agree to sacrifice output. They aim to draw up a plan before a meeting Nov. 30 in Vienna.
The energy agency said OPEC output increased as production from Iraq hit an all-time high and Libya reopened ports to export more crude. Production in non-OPEC member Russia hit a post-Soviet record.
As a result, the global supply of oil grew by 600,000 barrels a day in September, the energy agency reported.
While supply is running high, the agency said demand is slowing along with the global economy -- a combination that could pressure oil prices. The energy agency forecast that the market will remain oversupplied through mid-2017 if OPEC doesn't enact the cuts it pledged last month in Algeria.
"OPEC has abandoned its free-market policy set ... nearly two years ago. Global oil inventories are far too high -- in the view of some producers -- and they aren't being worked off nearly fast enough," the agency said. "The current price of oil has caused discomfort for all producers."
The task of carrying out the production-cut pledge will be complicated if, as reported, Iran, Libya and Nigeria are exempted from the cuts for various reasons. The energy agency said further increases from those three nations mean bigger cuts would have to be made by others, such as Saudi Arabia, to hit the reduction target.
It's also unclear how much non-OPEC members, notably Russia, will play along. Russian President Vladimir Putin said at a meeting in Istanbul on Monday that Russia was ready to support OPEC, which further buoyed oil prices.
Oil prices hit their highest level in a year on Monday but fell Tuesday. In afternoon trading, benchmark U.S. crude was down 64 cents to $50.71 a barrel in New York. Brent, the international standard, fell 81 cents to $52.33 a barrel in London.
Goldman Sachs analysts said oil prices could fall back to $43 if OPEC fails to finalize an output-cutting deal in Vienna. Even if there is an agreement, they said, it is unlikely that it would balance supply and demand next year because of the chance that some OPEC countries won't abide by targets and that non-OPEC nations will boost production.
In the summer of 2014, oil was trading above $100 a barrel, but increased output from non-OPEC countries, particularly the United States, created an oversupply. Instead of cutting production, OPEC opted to pump at high volumes to maintain market share and perhaps drive out U.S. shale oil and gas producers, who have higher operating costs.
Crude at $60 a barrel would probably trigger a strong increase in North American oil output, the head of the energy agency said.
A deal to reduce OPEC production -- if solidified on Nov. 30 -- could lift prices as high as $60 by the end of this year, Saudi Arabia's Energy and Industry Minister Khalid Al-Falih said at the World Energy Congress in Istanbul.
If prices reach $60 and stay there, U.S. shale drillers could find it commercially viable to revive production at some mothballed wells and increase output by more than 1 million barrels a day by early 2018, according to Vienna-based consultant JBC Energy.
"We may well see, in a short period of time, strong production growth coming from North America and elsewhere," International Energy Agency Executive Director Fatih Birol said Tuesday in a Bloomberg TV interview with Manus Cranny and Anna Edwards. "Prices around $60 would be sufficient."
Some U.S. producers have already stepped up operations. The number of active oil-drilling rigs in the U.S. has climbed from 328 in early May to 428 last week, according to Baker Hughes Inc.
Bjarne Schieldrop, chief commodities analyst at SEB AB bank in Oslo, said he expects the number of active U.S. rigs to rise by about 10 per week until OPEC holds its next formal meeting.
"As soon as OPEC moves into a position of trying to manage the price, it basically takes care of the downside risk," Schieldrop said by phone. "The consequence is increased U.S. production." If crude reaches and holds steady at $60, he said, he expects U.S. output to rise by at least 500,000 barrels a day by the end of 2017.
Information for this article was contributed by Angela Charlton and David Koenig of The Associated Press and Sam Wilkin of Bloomberg News.
Business on 10/12/2016