OPEC pumped the most crude last month in more than three years as Iran restored output to the highest level since international sanctions were strengthened in 2012.
The Organization of Petroleum Exporting Countries, responsible for 40% of world oil supplies, raised output by 100,700 barrels a day to 31.5 million last month, the group said in its monthly market report, citing external sources.
This increase came even as Saudi Arabia, which often curbs output toward the end of peak summer demand, told OPEC it cut production by the most in almost a year, according to Bloomberg.
Oil prices slumped to a six-month low below $50 a barrel in London last week as rising OPEC supplies, resilient US production and concerns over Chinese demand prolong a global glut. Iran reached an accord with world powers on July 14 that may ease sanctions on its oil exports later this year in return for curbing nuclear activity.
“Given the better-than-expected growth in global oil demand so far this year, together with some signs of a pickup in the economies of the major consuming countries, crude oil demand in the coming months should continue to improve and, thus, gradually reduce the imbalance in oil supply-demand,” OPEC’s Vienna-based secretariat said in the report.
Iran increased output by 32,300 bpd in July to 2.86 million bpd, the highest since June 2012, according to data OPEC compiles from “secondary sources” such as media agencies and international institutions.
The report also includes data directly submitted by its 12 members. In these figures, Saudi Arabia said it reduced output in July by 202,700 bpd to 10.36 million bpd. That’s the biggest reduction since August 2014.
A group total was unavailable for these statistics because Libya didn’t provide a production estimate.
OPEC increased estimates for global oil demand in 2016 by about 100,000 bpd. World consumption will climb by 1.3 million bpd, or 1.4%, to 94 million bpd in 2016. The growth rate is slightly lower than this year’s projected 1.5% expansion.
OPEC on Tuesday raised its forecast of oil supplies from non-member countries in 2015, a sign that oil's price collapse is taking longer to impact on shale and other competing sources than previously thought.
According to secondary sources cited by the report, OPEC produced 30.51 million bpd in July— 1.5 million bpd more than its 30-million-bpd target.
With OPEC forecasting demand for its crude will average 29.23 million bpd in 2015— steady from last month— the report points to a 2.28-million-bpd supply surplus in the market if the group keeps pumping at July's rate.
