The Organization of the Petroleum Exporting Countries' crude output dipped by 30,000 barrels per day to 31.72 million barrels per day in June from 31.75 million barrels per day in May reversing most of the 40,000 barrels per day increment of previous month.
The pressure on Iranian volumes intensified ahead of the July 1st 2012 implementation of European Union sanctions that not only ban the import of Iranian oil but also prohibit the provision of insurance for shipments of Iranian oil, even to non EU destinations.
The survey which involved key OPEC and oil industry officials and analysts said that because of pooling arrangements for reinsurance between protection and indemnity clubs around the world, the sanctions are having a big impact on non EU shipping.
Also having an impact are US financial sanctions which came into effect on June 28th 2012. These would bar from the US financial system the banks of countries continuing to do oil related business with Iran's central bank.
However, Washington has given 180 day waivers to a number of countries including Iran's top Asian oil customers which it deems to have made significant reductions in their imports of Iranian oil. The survey estimated that Iranian output dropped by 150,000 barrels per day to 3.1 million barrels per day in June from 3.25 million barrels per day in May.
Mr John Kingston Platts director of news said that “The number that no survey can fully know is how much of Iran's output is going into storage because sanctions, notably the EU sanctions on shipping have really hit Iran's exports. The drop in Iran's sales is far greater than the drop in its output. So for now at least, the market is well supplied with all other OPEC countries aside from Iran producing a net increase from last month and with the Iranians socking away a lot of oil that will ultimately find its way on the market. From that perspective, it's more bearish news.”
Smaller output dips totaling 30,000 barrel per day came from Angola and Iraq while Saudi Arabia boosted output by 100,000 barrels per day in June to 10.1 million barrels per day. Smaller increments totaling 50,000 barrels per day came from Libya and the UAE. The June total leaves OPEC's 12 members overproducing their 30 million barrels per day output ceiling by 1.72 million barrels per day.
The oil producing organization's ministers agreed at a June 14 meeting in Vienna to maintain the ceiling in effect since the beginning of the year.
Mr Abdalla el Badri secretary general of OPEC said that the effect of the decision on production was unlikely to be felt until July. There are no official individual country quotas. Oil prices have been volatile in recent months with North Sea Brent plunging from as high as USD 128.40 per barrel on March 1st 2012 to as low as USD 88.49 per barrel on June 22nd 2012.
Source - Trade Arabia
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