Three OPEC members expected to be exempt from a deal to limit production and Iraq ratcheted up output by a total of roughly 300,000 barrels a day in September, according to the cartel's monthly oil market report.
The increase drove total OPEC production to an eight-year high, despite a sizable decline in output from top exporter Saudi Arabia. But perhaps more worrisome than the headline output figure is the prospect that three of the countries — Iran, Libya and Nigeria — will restore a substantial portion of sidelined supply.
This has been a growing concern for market watchers. Goldman Sachs has cautioned a thaw in conflicts in oil-exporting countries could put more crude into an oversupplied market and complicate efforts by OPEC to scale back output.
Last month, members struck an agreement in Algeria to cut supply by several hundred thousand barrels a day, though Iran, Libya and Nigeria may not be subject to quotas under the terms of a final deal to be hammered out by OPEC's annual meeting on Nov. 30. Saudi and Russian officials said Tuesday they would also work to secure cuts from non-OPEC producers, as well.
Saudi Energy Minister Khalid al-Falih has said Iran, Nigeria and Libya could be allowed to pump "at maximum levels that make sense" given their special situations.
Libya increased production by more than 92,000 barrels a day last month after resuming crude exports from ports once closed amid the country's civil strife. Nigeria's output was up about 95,000 barrels as the western African nation brings back production after a series of attacks on oil infrastructure carried out by militants seeking a greater share of the country's fossil fuel wealth for impoverished Delta residents.
Andrew Lipow, president of Lipow Oil Associates, said this "puts OPEC in an even tougher spot because they have to cut even more production to accommodate the resumption of sales out of Libya and Nigeria."
Meanwhile, Iran is continuing to restore production after the lifting of international sanctions in January. The country tacked on a little more than 21,000 barrels a day, roughly in line with gains in the previous two months. Many believe Tehran will soon hit the upward limits of its production capacity.
Iraq accounted for the largest increase in September, with production up 105,000 barrels. The country's oil minister, Jabbar al-Luaibi, raised concerns just hours after news of the Algeria agreement broke. He said Iraq, the No. 2 OPEC producer, could walk away from a deal if the cartel did not adjust the way it calculates current output.
"The fact is that the OPEC production is just a free for all over the next couple of months as they try to produce at maximum rates," before oil limits are enforced, Lipow said.
Saudi Arabia saw the largest production declines in September, with output down more than 87,000 barrels a day. The kingdom experiences a seasonal downshift in production at this time of year as electricity demand for air conditioning winds down at the end of the punishingly hot summer season.
On Tuesday, Bob McNally, founder and president of energy consulting firm The Rapidan Group, told CNBC any so-called freeze by Saudi Arabia should be considered "smoke and mirrors" because the country will merely be returning to a normal rate of production after helping to push OPEC output up by about 900,000 barrels a day since February.