LONDON (Reuters): OPEC’s oil output has fallen in June as Western sanctions have pushed Iran’s supply to its lowest level in more than two decades, relegating the country to OPEC’s third-largest producer behind Iraq, a Reuters survey found on Friday.
Production from the Organization of the Petroleum Exporting Countries still has remained close to its highest since 2008 as extra oil from Saudi Arabia, Iraq and Libya has compensated for the drop in Iranian output.
The survey indicated OPEC has been pumping much more than its official ceiling of 30 million barrels per day (bpd), despite agreeing to adhere to that target at a June 14 meeting in response to a fall in prices below $100 a barrel.
With Iranian output falling, large supply cuts by other members may not be needed.
“Ultimately, as demand seasonally rises in the summer and increasing volumes of Iranian oil come under embargo, the likelihood is that OPEC will only need to marginally adjust production lower,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London.
Supply from the 12-member OPEC has averaged 31.63 million bpd as the end of the month approaches, down from a revised 31.70 million bpd in May, the survey of sources at oil companies, OPEC officials and analysts found.
Production is down only slightly from its highest in four years. OPEC pumped 31.75 million bpd in April, the highest since September 2008, based on Reuters surveys.
The biggest drop in supplies came from Iran, whose crude is subject to a European Union embargo on July 1 that also bars EU insurance firms from covering Iran’s exports.
Iran’s supply slipped by 180,000 bpd to 2.95 million bpd in June, according to the survey. That would be its lowest output since it produced 2.81 million bpd in 1989, according to figures from the U.S. Energy Information Administration.
Earlier Iran acknowledged for the first time that exports had fallen significantly. According to sources outside Iran, its exports posted the first sizeable decline in March in response to the looming EU embargo.
Exports also declined in Angola due to shipping schedules. Loading programs suggest output will slip further in July before rebounding in August.
In June, the biggest increase in OPEC supply has come from Saudi Arabia, its top producer.
The kingdom has pumped an extra 100,000 bpd, the survey found, taking output to 10.10 million bpd, the highest in decades. Saudi supply in May was revised 100,000 bpd lower. There was no sign that its Gulf allies Kuwait and the United Arab Emirates have throttled back supplies.
Supply also rose in Iraq as increased exports from the country’s south offset lower shipments from the north, making it OPEC’s second-largest producer, ahead of Iran.
Libya’s production continued to recover from a virtual shutdown during the 2011 civil war, rising by 60,000 bpd to 1.48 million bpd, within a whisker of the pre-war rate.