OPEC output drops in June

The conflict in Iraq may have ended but the uncertainty in the Middle East is still having an impact on oil production. According to a survey by industry experts Platts, OPEC output fell by 380,000 barrels per day in June.

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By  John Irish Published  July 14, 2003

Oil production from the eleven OPEC nations (Organisation of the Petroleum Exporting Countries), including Iraq, fell to an average 26.23 million barrels per day (b/d) of crude in June, according to a survey carried out by industry experts Platts.

While the ongoing uncertainty in Iraq has meant that the former Baathist state has not restored production to pre-war levels, the ten remaining OPEC members struggled to reach their production quotas. Collectively, they pumped 25.77 million b/d, a drop of 580,000 million from the May average of 26.35 million. The cut is still 370,000 b/d above OPEC’s collective ceiling, which was imposed at the beginning of June.

“Crude prices remain strong, with Iraq struggling to increase production and the rest of OPEC reining in output in June,” said Peter Zipf, editor in chief of Platts Oilgram News. “These factors would appear to leave the cartel with a favoured option of holding the line when it meets again in just three weeks.”

Interim Iraqi oil minister Thamir Ghadban had forecasted crude output would reach 1.5 million b/d by the end of June. However with looting, sabotage on pipelines and a general lack of refining capacities, Iraq only boosted net production from 260,000 b/d to 460,000.

Meanwhile, both Saudi Arabia and Kuwait, which accounted for the largest cuts in output, failed to fall in line within their production quotas. The Kingdom reduced output by 480,000 b/d to 8.62 b/d, still 360,000 over its 8.256 million b/d quota while Kuwait cut production by 160,000 b/d to an average of 2.16 million b/d in June as opposed to the desired 2.038 million b/d target.

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