Libya’s OPEC governor called for the group to reduce oil output by at least 500,000 barrels a day as its biggest members discount supplies to defend market share rather than cut production to boost prices.
The market is oversupplied by about 1 million barrels a day, Libya’s Samir Kamal said by e-mail yesterday. His comments reflected personal views, not the official Libyan position, he said. They mark the first time a member nation representative is suggesting how much production needs to be reduced after prices entered a bear market.
Brent crude, a benchmark for more than half of the world’s oil, has tumbled about 25 percent since June, as producers including Saudi Arabia cut export prices to stimulate demand amid the highest U.S. output in almost 30 years. Banks including BNP Paribas SA and Bank of America Corp. predict the price rout may be over, in part because they expect the Organization of Petroleum Exporting Countries to reduce supply.
“I would like OPEC to cut production by at least half a million, as all studies indicate the need for that” because of the increasing output from outside the group, he said.
Libya shouldn’t be expected to reduce its own oil output because the country is still struggling to restore production that has been disrupted for more than a year by political conflict, Kamal said.
Saudi Arabia, the world’s biggest crude exporter, and other large producers in OPEC haven’t signaled they’ll push for a cut at a planned meeting of the group on Nov. 27 in Vienna.
Libya, holder of Africa’s largest crude reserves, is producing 800,000 barrels a day, compared with 215,000 barrels a day in April when oil ports were shut by rebels seeking self-rule in the eastern region, according to state-run National Oil Corp.
The country’s current output is still half what it was before the 2011 rebellion that ended Muammar Qaddafi’s 42-year rule. Political schisms and violence have intensified amid a lack of central authority since his ouster and the chaos has undercut efforts to restore production to pre-2011 levels.
“We should not be expected to cut our production, which we are struggling to bring to the level of one million” barrels a day, Kamal said. Libya was out of oil markets for almost a year and faces budget deficits, he said. Other OPEC members have said they “will make room for Libyan production.”