Ecuador breaks ranks with Opec on production cuts by increasing oil output

Ecuador has become the first country to publicly admit it will not meet Opec’s production curbs, saying it needs to pump more oil to address its fiscal deficit.

The South American country’s promised cut of 26,000 barrels of oil a day is a tiny drop in the 1.8 million barrels/day that the cartel recently agreed to curb until early 2018, but the decision is still the first crack in the deal’s unity.

“There’s a need for funds for the fiscal treasury, hence we’ve taken the decision to gradually increase output,” oil minister Carlos Perez told local television, adding he did not think the decision would have a big impact on Opec’s output.

However, experts said the move could embolden other countries to rethink their commitment to the cuts. Opec producers and non-members including Russia extended but did not deepen production cuts at the end of May , and the oil price subsequently fell by 8 per cent in June.

Recent figures from the cartel show that Opec production in June was up 1.2 per cent on May, as countries including Libya and Nigeria, which are not covered by the deal, pumped more oil.