Opec oil output in Aug falls from record on Iraq disruption: survey

SEP 2, 201511:33 PM

[LONDON] Opec oil output fell in August from the highest monthly level in recent history, a Reuters survey found on Wednesday, as disruptions to flows on Iraq's northern pipeline halted supply growth from the group's second-largest producer.

Largely stable output from Saudi Arabia and other Gulf members of the Organization of the Petroleum Exporting Countries indicated they are not wavering in their focus on defending market share instead of prices.

Opec supply fell in August to 31.71 million barrels per day (bpd) from a revised 31.88 million bpd in July, according to the survey, based on shipping data and information from sources at oil companies, Opec and consultants.

Oil has weakened due to surging output and is trading below US$50, not far from a more than six-year low close to US$42 reached last month. Opec's shift to the market-share strategy in 2014, led by Saudi Arabia, deepened the decline.

Despite calls from some members for an emergency meeting, even Opec delegates who favour supply cuts do not expect any to be agreed, leaving a surplus which Opec's own numbers indicate is at least 2 million bpd on the market.

"I really see no chance for holding a meeting before the scheduled Dec 4 meeting, which will reach no concrete agreement to drastically cut production," said a delegate from one of Opec's African members. "We know that the present oversupply is more than 2 million barrels per day."

The decline in Opec output from July's level was the first since February based on Reuters surveys. Even so, Opec has boosted production by almost 1.5 million bpd since the November 2014 switch in policy to defend market share.

July's output from Opec's current 12 members was revised lower but is still the highest since Reuters records began in 1997. Opec output was above 32 million bpd in 2008 until Indonesia left the group at the end of the year.

The biggest drop in August came from Iraq, one of the main drivers of the rise in Opec output this year.

Exports from southern Iraq edged about 40,000 bpd lower to just above 3 million bpd, according to Iraqi officials and shipping data seen by Reuters.

Shipments from Iraq's north via Ceyhan in Turkey by Iraq's State Oil Marketing Organisation and the Kurdistan Regional Government posted a larger fall because of halts in the flow along the pipeline from Iraq, shipping data showed.

Top exporter Saudi Arabia kept output largely stable in August, sources in the survey said, following a decline in July. There was no significant change in the other major Gulf producers, Kuwait and the United Arab Emirates.

Nigerian exports rose in August according to loading schedules, although Royal Dutch Shell said on Aug 27 it shut two pipelines and declared force majeure on Bonny crude exports, which could have a larger impact in September.

Algeria posted a small increase after starting production at two fields and output in Iran, eager to reclaim its traditional spot as Opec's second-largest producer if and when sanctions are lifted, also edged up slightly.

Libyan production declined in August. Supply remains disrupted by unrest and negotiations to reopen closed oil facilities have yet to succeed.

REUTER
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