OPEC oil output has risen in March to its highest since October 2008 as higher supply from Iraq and further recovery in Libya’s production offset a drop in shipments from Iran, a Reuters survey has found.
Supply from the 12 members of the Organization of the Petroleum Exporting Countries has averaged 31.26 million barrels per day (bpd), up from 31.16 million bpd in February, the survey of sources at oil companies, OPEC officials and analysts found.
The survey found that exports from Iran are falling as some buyers stop or scale back purchases because of sanctions. Concern about Iranian supply has helped drive a 15 per cent rally in oil prices this year to $123 a barrel.
OPEC is pumping far more than its official production target of 30 million bpd but oil prices have rallied and inventories have not increased. For some, that indicates demand may be stronger than expected.
“OPEC has been consecutively increasing production over the recent months and yet this has failed to translate in a material rise of OECD inventories from their five-year lows,” said Harry Tchilinguirian, analyst at BNP Paribas.
“This suggests to us that the market is not fundamentally developing a surplus.”
In March, the biggest increase in OPEC supply once again came from Libya, where output continues to recover after being virtually shut down during the 2011 uprising.
Iraq provided the second-largest boost as exports rebounded after weather-related disruptions in February and as a new Gulf shipping outlet provided a long-awaited boost to capacity.
Despite fewer barrels from Iran, March’s total is OPEC’s highest since October 2008, shortly before the group agreed to a series of supply curbs to combat recession, based on Reuters surveys.
In Libya, exports and refinery demand climbed to 1.4 million bpd up 300,000 bpd from February, according to the survey, getting closer to the pre-war rate of 1.6 million bpd expected later this year.
Iraq exported more as its new Gulf outlet, a floating single-point mooring, came into service, enabling a boost in supply to 2.83 million bpd, up 220,000 bpd from February.
The country, where companies such as BP Plc are working to expand production, is expected to provide the world’s largest expansion in export capacity in 2012.
Saudi Arabian supply edged up in March to 9.9 million bpd, the survey found. Saudi Oil Minister Ali al-Naimi criticized high prices in a piece in the Financial Times this week, but offered no sign the kingdom was boosting output further.
Output in Iran, which is facing a European Union ban on its crude from July 1, fell significantly in March, according to oil industry sources outside the country. Reuters a week ago reported that exports were falling.
The drop this month is the first sizeable decline in shipments since the European Union announced in January plans to embargo Iran’s crude from July and Washington and Brussels sanctioned Iran’s central bank.
Supply declined in both Angola and Nigeria due to reduced exports. Loading schedules indicate supply will rebound from OPEC’s two West African members in April.
OPEC at a meeting in December set a target to produce 30 million bpd, settling an argument which broke out in 2011 after Iran and other members opposed a Saudi-led plan to raise OPEC’s production ceiling.
Output has remained above the target all year as Libyan supply recovered.