OPEC pumps more oil in July despite cut pledge: IEA

“It is not entirely clear that this is the case today.”

Saudi Arabia and Iraq, OPEC’s top two producers, vowed Thursday to strengthen their commitment to the production cuts.

While Saudi Arabia met its production limits in July, Iraq only made one-third of the cut it had pledged, according to the IEA report.

The IEA found that global oil supply rose by nearly half a billion barrels per day in July to 98.16 million barrels per day (mbd).

It raised its forecast for growth in demand this year, to 1.5 mbd, to an average daily demand 97.6 mbd.

“Producers should find encouragement from demand, which is growing year-on-year more strongly than first thought,” said the IEA, adding “from the producers’ viewpoint, strong growth reduces the stocks overhang.”

The production cut deal last year was a change of strategy by OPEC, which led by Saudi Arabia had previously been pumping as much it could in order to squeeze out higher cost competitors, in particular shale oil producers in the United States.

But US shale producers have proved more resilient, cutting costs, with output now higher than before oil prices tumbled from above $100 per barrel in 2014.

While US oil firms have recently announced cuts to investments, the IEA said it was sticking to its forecasts for output to increase further thanks to gains in productivity.

Oil prices fell on Friday, with Brent crude down 39 cents to $51.51 in London morning trading. WTI fell 41 cents to $48.18.

Oil prices have swung around $50 per barrel since the OPEC-led deal came into place.