Update1: Nigeria, Libya leads OPEC oil output rally by 250,000 bpd in May

OPEC oil output rose by 250,000 to record 32.22million in May, the highest this year, buoyed by output recovery from Nigeria and Libya which offset improved compliance from 11 countries targeting 95 percent output cut.

A drop in output in Angola and Iraq and continued high compliance from Gulf producers Saudi Arabia and Kuwait helped lift OPEC’s adherence with the supply cut deal to 95 percent from 90 percent in April, according to a Reuters surveys.

Nigeria and Libya were exempted because their outputs were affected by conflicts in their countries. However, supplies from both nations  are recovering.

Africa’s top oil producer is set to restore its 300,000 barrels per day Forcados terminal and resume loading cargoes for export. However indigenous producers who were badly affected by the bombing of Forcados pipeline in February last year are yet to be weaned from barges which they are currently using.

“Last week in Lagos we learned that Forcados is back. But producers affected by outage trying to avoid it. For them barging is the future,” says Gail Anderson, Nigeria oil, gas & power, research director at Wood Mackenzie, a research firm on a Twitter post.

In Libya, the state oil firm said output had reached 827,000 bpd on Wednesday, around levels last seen in 2014. But production is still half the 1.60 million bpd Libya pumped before the 2011 civil war.

OPEC and non-OPEC members agreed to cut production by 1.8million barrels per day in November 2016, and reaffirmed the deal on May 25 till March 2018. Current production recovery is stirring hysteria in oil markets. Brent crude oil prices fell to a three-week low on Wednesday on news of production recovery from Libya.

Global benchmark Brent crude futures were down $2.02, or 3.9 percent, at $49.82 a barrel by yesterday. U.S. West Texas Intermediate crude futures traded at $47.93, down $1.73, or 3.5 percent.

“Unless some bullish news stops this, prices will fall further in particular now with Brent trading below the post-OPEC low,” Carsten Fritsch, commodity analyst at Commerzbank told CNBC.

Oil prices has gained some ground but an inventory glut and rising supply by outside producers has kept prices below the $60 a barrel that Saudi Arabia wants. A sustained output rise from Libya and Nigeria poses further challenges.

ISAAC ANYAOGU, with Agency reports