LONDON, Aug. 6, 2012 /PRNewswire/ -- Crude oil output from the Organization of Petroleum Exporting Countries (OPEC) fell 270,000 barrels per day (b/d) in July to 31.45 million b/d as the impact of U.S. and European Union sanctions continued to affect Iran's oil exports, a Platts survey of OPEC and oil industry officials and analysts showed Monday. This follows June production of 31.72 million barrels per day.
"OPEC was producing well above demand in the second quarter, but now that the third quarter has begun – when demand historically starts to rise – the group has throttled back somewhat," says John Kingston, Platts global director of news. "And it is not just Iran; there are other reductions coming from places where it wouldn't be expected, such as 80,000 b/d in Angola."
"The weekend news that there might be a settlement between South Sudan and Sudan, and if it is carried out and exports resume, it will likely bring a shot of supply to the market that's suddenly confronting declines in OPEC output at – from the consumer's perspective – the wrong time of year," Kingston notes.
Iranian volumes plunged by 200,000 b/d to 2.9 million b/d in July, when sanctions directly targeting Iran's oil sales came into full force. Europe had already been preparing over several months for the European Union (EU) embargo on the import of Iranian oil, which came into effect on July 1. But the EU measures also include a ban on the provision of insurance for ships carrying Iranian oil, even to non-EU destinations. This appears to have had a bigger impact on Tehran's customers in Asia than new U.S. financial sanctions because most of the world's shipping cover is linked to EU-based insurers.
In the run-up to the June 28 imposition of U.S. financial sanctions on Iran, Washington dispensed 180-day waivers to Iran's major customers in Asia in return for "significant" reductions in their oil purchases from Tehran. Recipients include Japan, South Korea, India and, at the eleventh hour, China, despite Beijing's refusal to recognize non-UN sanctions.
Official figures show, however, that China, Japan and South Korea increased their imports of Iranian crude in June from May as the sanctions deadlines approached.
Another sizeable output dip of 100,000 b/d came from OPEC kingpin Saudi Arabia, although July's total 10 million b/d was still around recent highs.
The survey showed output dropped 80,000 b/d in Angola, 30,000 b/d in Libya and 10,000 b/d in Algeria.
Three countries increased production: Iraq by 80,000 b/d to 3.05 million b/d, Kuwait by 50,000 b/d to 2.8 million b/d and Nigeria by 20,000 b/d to 2.2 million b/d.
The July total leaves OPEC's 12 members having overproduced their output ceiling of 30 million b/d by 1.45 million b/d.
OPEC ministers agreed at a June 14 meeting in Vienna to maintain the ceiling, in effect since the beginning of the year. Secretary General Abdalla el-Badri told reporters after the meeting that the effect of the decision on production was unlikely to be felt until July. There are no official individual country quotas.
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