(EnergyAsia, August 22 2012, Wednesday) — The start of a global trade ban on Iranian crude oil led to last month’s slight drop in crude oil production by Organisation of Petroleum Exporting Countries (OPEC) members, said US energy media Platts.
In a survey of OPEC and industry officials and analysts, Platts said OPEC output fell 270,000 b/d from 31.72 million b/d in June to 31.45 million b/d in July on the combined impact of US and European Union (EU) sanctions on Iran’s oil exports.
“OPEC was producing well above demand in the second quarter, but now that the third quarter has begun – when demand historically starts to rise – the group has throttled back somewhat,” said John Kingston, Platts global director of news.
“And it is not just Iran; there are other reductions coming from places where it wouldn’t be expected, such as 80,000 b/d in Angola.
Iranian volumes plunged by 200,000 b/d to 2.9 million b/d in July, when sanctions directly targeting the Islamic regime’s oil sales came into full force.
Europe had already been preparing over several months for the EU embargo on the import of Iranian oil, which came into effect on July 1.
But the EU measures also include a ban on the provision of insurance for ships carrying Iranian oil, even to non-EU destinations. This appears to have had a bigger impact on Tehran’s customers in Asia than new US financial sanctions because most of the world’s shipping cover is linked to EU-based insurers.
In the run-up to the June 28 imposition of US financial sanctions on Iran, Washington dispensed 180-day waivers to Iran’s major customers in Asia in return for “significant” reductions in their oil purchases from Tehran.
Recipients include Japan, South Korea, India and, at the eleventh hour, China and Singapore, despite Beijing’s refusal to recognise non-UN sanctions.
According to Platts, official figures show that China, Japan and South Korea increased their imports of Iranian crude in June from May as the sanctions deadlines approached.
Another sizeable output dip of 100,000 b/d came from OPEC kingpin Saudi Arabia, although July’s total 10 million b/d was still around recent highs.
The Platts survey showed output dropped 80,000 b/d in Angola, 30,000 b/d in Libya and 10,000 b/d in Algeria.
Offsetting these losses, Platts said three countries increased production: Iraq by 80,000 b/d to 3.05 million b/d, Kuwait by 50,000 b/d to 2.8 million b/d and Nigeria by 20,000 b/d to 2.2 million b/d.
The July total leaves OPEC’s 12 members having overproduced their output ceiling of 30 million b/d by 1.45 million b/d in July.
OPEC ministers agreed at their June 14 meeting in Vienna to maintain the ceiling, in effect since the beginning of the year.
The cartel’s Secretary General Abdalla el-Badri told reporters after the meeting that the effect of the decision on production was unlikely to be felt until July. There are no official individual country quotas.