Daily Management Review

Additional Crude Input from Iran Pushes Opec Output to Three Year High


08/11/2015




With the prospects of a new era of low prices in crude oil due to over production, the Organisation of the Petroleum Exporting Countries (Opec) announced that their crude production output in July was the highest in the last there years for monthly production.

This comes even as the crude prices fall to very low levels of $50 a barrel.

This reported record increase in output was a result of Iran's biggest contribution to crude oil since 2012.

The Middle East dominated cartel of crude supply showed almost a 101,000-a-day increase in output to reach a staggering 31.5m barrels per day (mb/d) in Jul. The result of the bigger output of crude by the Middle East producers was that the global oil supply increased by 230,000 barrels per day in July to reach an average 94.9 mb/d.

A report published by Opec said: "crude oil output increased mostly from Iraq, Angola, Saudi Arabia and Iran, while production in Libya showed the largest drop".

While the Opec data did not include Iraq, its output stood at 27.44 mb/d in July which was 540,000 barrels per day more compared to the previous month.
 
“Given the better-than-expected growth in global oil demand so far this year, together with some signs of a pick-up 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 said in a report. 

Driven by a higher-than-expected output from producers mainly outside of North America, the non-Opec oil supply was expected to grow by 0.96m barrels per day (mb/d) in 2015, the report noted.

The report also indicated that in the next fiscal the crude output from non-OPEC oil producers is expected to by 0.27 mb/d. this was slightly than the last report of the Opec.

The recent fall in prices in crude oil below or around the $50 mark is a result of abundant supply in the global crude market along worries about the impact of the apparent slowdown of the Chinese economy, the stabilization of the US rig count and the reports that Saudi Arabia would continue to aggressively pump more crude oil.

But the latest report by Opec has noted that Saudi Arabia had reduced the daily output of crude oil in July by nearly 203,000 barrels a day to 10.36. This is the most significant reduction in crude oil production by the Middle East oil produced since the last one year.

There has been a noted desperation among those oil producing countries whose economies are sensitive to the international price of crude oil. This list includes some members of the Opec countries.

For example, Algeria managed to raise oil prices with WTI up by more than a dollar to just shy of $45 after the country called for an emergency meeting on Monday.

Analysts at the stock markets however are advising investors to take advantage of the current low prices and buy quality E&P stocks.

(Source: www.digitallook.com) 






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