Oil supply outages fall as OPEC decides on extension of production restraint agreement

Global unplanned outages have continued to fall in 2017, with the January-October average of 2.8 million b/d being one million b/d lower than the 2016 average of 3.8 million b/d. This has been driven largely by reduced outages in Libya and Nigeria, where violence and unrest have decreased. The fall in outages during 2017 has offset the full impact of the OPEC and non-OPEC cuts introduced at the start of the year. The lows reached in the third quarter of 2017 came at a critical juncture ahead of the 30 November 2017 full ministerial OPEC meeting, and will be crucial to discussions on the extension of the restraint. Outages are expected to continue falling in 2018 and 2019, however, risks to production exist. In Libya and Nigeria, a return to instability is possible, along with escalating tensions in the Middle East, and Venezuela’s complex debt situation. Geopolitical risk and oil supply outages will be key to the rebalancing of the oil market.