Saudi production up with Opec oil price down
Saudi Arabia's oil production crept back above 10 million barrels per day (bpd) and Opec continued to pump well above its self-imposed ceiling last month, as the price for its crude dropped below US$100 a barrel for the first time in eight months.
The Opec reference basket price slumped by 13 per cent to average $93.98 a barrel, the organisation said in its monthly oil report for June.
"The sluggish OECD [Organisation for Economic Co-operation and Development] economy is suppressing the region's oil demand, except for in Japan, where the shut-down of most of the country's nuclear power plants has led to increased crude and fuel oil burning," said the report.
The organisation's 12 members pumped a daily average of 31.36 million bpd last month, a decrease of about 100,000 bpd from May's levels, with Iran's production dropping by about 190,000 bpd.
The member states agreed to a production ceiling of 30 million bpd at a meeting last December but have been pumping above that level since then.
Saudi Arabia, Opec's biggest producer and the only member that can raise production significantly at short notice, continued to show high output levels in spite of the price decline.
The kingdom's production increased by almost 300,000 bpd to 10.1 million bpd, according to its own estimates.
Production in Saudi Arabia averaged above 10 million bpd throughout the second quarter, according to the report.
The Saudis have been making use of their spare capacity - idle pumps that can be called into action within 90 days - to compensate for declining Iranian exports.
Iran has been subject to United States and European sanctions since the new year, as well as a European Union embargo on its oil that came into full force this month.
The European sanctions also prevent the insurance of cargoes of Iranian crude by insurers based in the EU, a crippling blow to Iran's exports.
As prices have fallen in spite of the sanctions against Iran - provoked by the country's refusal to abandon its nuclear programme - there had been speculation in the market that Saudi Arabia would wind down its production.
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Updated: July 12, 2012 04:00 AM