OPEC Production Increases Due to Libya's Recovery

OPEC oil production has rebounded from its lowest levels this year, primarily due to Libya resolving a political crisis over the control of its Central Bank. According to a report by Reuters, Libya's oil output has fully recovered after the eastern-based government and the Tripoli-based National Oil Corporation (NOC) announced the reopening of all oilfields and export terminals last week.

Before the production halt in late August, Libya was pumping approximately 1.2 million barrels of crude per day. In September, Libya's crude exports averaged 460,000 barrels per day (bpd). The resurgence contributed to OPEC's overall output, which reached 26.33 million bpd in October—a 195,000 bpd increase from September, as per a Reuters survey.

OPEC pumped about 46,000 bpd more than the implied target for the nine members covered by supply cut agreements, with Gabon exceeding its target by the largest amount.

Venezuela's Output Hits Four-Year High

Venezuela also increased its crude output, reaching 860,000 bpd in October—the highest level in four years. Both Libya and Venezuela are exempt from the OPEC+ production cut agreements, allowing them to boost their production levels independently.

However, increases from Libya and Venezuela were partially offset by declines in exports from Iraq and Iran. Iraq reduced its output to 3.98 million bpd due to a drop in production in northern regions and lower domestic consumption.

Saudi Aramco Reports 15.4% Decline in Q3 Earnings

In related news, Saudi Aramco, the world's largest oil company by production and market value, announced on Tuesday a 15.4% year-on-year decline in its third-quarter earnings. The drop is attributed to lower oil prices and weaker refining margins. Despite the decrease, Aramco maintained its substantial quarterly dividend of $31.1 billion, most of which is paid to the Kingdom of Saudi Arabia.

Aramco reported a net income of $27.564 billion for the third quarter, down from $32.583 billion in the same period last year. Nevertheless, the earnings surpassed the consensus estimate of $26.89 billion compiled by Visible Alpha.

Earnings before interest and tax fell by 18.1%, primarily due to lower crude oil prices, reduced crude oil volumes sold, and weakening refining margins. These factors mirror the challenges faced by other major oil and gas producers, which have also reported lower profits due to decreased oil and gas prices and sluggish refining margins.

Saudi Arabia relies heavily on income from oil exports and Aramco's dividends to finance its ambitious Vision 2030 program. Spearheaded by Crown Prince Mohammed bin Salman, the initiative aims to diversify the Kingdom's economy, reduce its reliance on oil, and transform it into an investment-friendly destination with grand projects and business opportunities.