Organization of Petroleum Exporting Countries (OPEC) has agreed to a deal in September to keep the production from the organization between 32.5 million and 33 million barrels per day. We have expressed our concerns with regard to the deal, especially in relation to the policing of the levels of production and to the general agreement on who would produce how much.

In this article, we discuss the concerns with regard to the latter as the productions from OPEC hardly matches the deal in September. When the meeting took place in late September production data from August was available. In August OPEC produced 33.17 million barrels per day and latest data show that on an average, it has produced 33.246 million barrels per day in the third quarter. We have spoken of this before but it worth mentioning again that Iran, Libya, and Nigeria are exempted from the deal, which means that Iran would probably increase production by at least 0.6 million barrels from August level. So if we include, Libya and Nigeria, other OPEC members would have to take at least a million barrel cut in production, probably more to abide by the deal. This would truly test the unity of OPEC.

After the deal, one would expect the OPEC to start cutting down production, instead, OPEC produced more in September; 33.4 million barrels per day. The production level is showing no signs of cooling down. We don’t believe that OPEC is in a place to implement such a deal in November. Even if a deal could be agreed in November, implementation would take much longer.