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OPEC Output Up for Third Month in July: Survey

Reuters
Monday, 4 Aug 2008 | 9:25 AM ET

OPEC oil supply rose for a third consecutive month in July due to higher output from the world's top exporter Saudi Arabia and smaller increases from other members, a Reuters survey showed on Monday.

Supply from the Organization of the Petroleum Exporting Countries climbed to 32.58 million barrels per day in July from 32.33 million bpd in June, according to the survey of oil firms, OPEC officials and analysts.

The increase coincided with a drop in oil prices from a record high of $147.27 a barrel on July 11 to about $124.

But analysts said the extra OPEC oil would barely counter falling supply from some major producers outside the group.

"OPEC production may be on the rise, but it does not hide a sharp contraction in non-OPEC crude output in the first half of this year and deteriorating prospects for Russian supply," said Harry Tchlinguirian at BNP Paribas.

Output in Russia fell in July from a year ago, energy ministry data showed on Monday.

Russia is the second-largest exporter in the world and has been the engine of supply growth outside OPEC in recent years.

Saudi Arabia pumped 9.7 million bpd in July, up from 9.45 million bpd in June, according to the survey.

The kingdom began raising output earlier this year in response to more demand and to quell what it sees as unacceptably high prices.

Output rose by 30,000 bpd in Iran, the second-largest OPEC producer, which moved some of the unsold crude oil it had been storing on tankers at sea during July.

Oil prices, which were up before the survey was released, turned lower.

U.S. crude was down $1.22 at $123.88.

OPEC pumps two in every five barrels of oil.

Above Target

The latest increase in supply leaves the 12 members bound by output targets, all except Iraq, pumping 30.2 million bpd, far more than their unofficial target of 29.67 million bpd.

Given the drop in prices since last month, some OPEC members have expressed concern about output levels and raised the possibility of supply cuts should prices fall further.

Iran's oil minister, Gholamhossein Nozari, warned on Saturday that OPEC members which have raised supply "must bring it under control" should prices fall further.

OPEC has kept its supply target unchanged this year and meets to review output policy on Sept. 9.

In July, supply also climbed slightly in Nigeria, where attacks by militants on oil installations have curbed output.

Production rose by 30,000 bpd in July to 1.9 million bpd, the survey found, restoring the country to its traditional position as Africa's top producer, which Angola held in June.

In Nigeria, Chevron in July restored output at the 120,000 bpd Abiteye-Olero crude pipeline, which gunmen had sabotaged in June.

Pennington crude returned to the market after the oilfield was shut down for about a year.

But attacks on Eni and Royal Dutch Shell oil pipelines during July limited the extent of the rebound.

Libya had the largest drop in supply within OPEC last month because of maintenance and repair work.

Maintenance on a pipeline from Waha started on or around July 10, reducing supply by 100,000 bpd.

The 45,000 bpd al-Jurf field remained closed for work to repair a damaged well.

Output fell slightly in Iraq due to lower shipments of Kirkuk from the country's north, which were briefly halted.

Turkey allowed Iraq to restart supplies through the pipeline from the Kirkuk fields on July 22 after halting the flow for a day, pending payment by Iraq of a $100 million debt.

Indonesia said in May it planned to quit OPEC. It has yet to formally withdraw.

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