OPEC's June Production Down According to Platts

OPEC's eleven members, including Iraq, pumped an average 26.23-mil b/d of crude in June, down 380,000 b/d from May's 26.61-mil b/d, a Platts survey of OPEC and oil industry officials showed July 9.

Excluding Iraq, which is still struggling to restore output to pre-war levels, the ten members with production quotas pumped 25.77-mil b/d, down 580,000 b/d from their May average of 26.35-mil b/d and just 370,000 b/d above their collective ceiling which came into effect at the beginning of June.

Despite de facto oil minister Thamir Ghadban's prediction that crude output would reach 1.5-mil b/d by the end of June, Iraq managed to boost net average production by only 200,000 b/d to 460,000 b/d, thanks to looting, sabotage on the Kirkuk-Ceyhan pipeline, and lack of refining capacity.

"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 favored option of holding the line when it meets again in just three weeks."

The Iraqis have now sold some 18 million barrels of crude in two tenders, the more recent of which was awarded this week and consisted entirely of Basrah Light to be lifted from Gulf port Mina al-Bakr. Two million barrels of the previous tender were also Basrah Light from the Gulf. The rest of the crude sold in the first tender was Kirkuk-produced before the war and stored in tanks at Turkish Mediterranean port Ceyhan. Sabotage has prevented the Iraqis from resuming crude flows from Kirkuk along the pipeline to Ceyhan.

Nigeria managed to boost output back above 2-mil b/d for the first time since February after ethnic unrest in the Niger Delta reduced production to as low as 1.85-mil b/d in April. It averaged 2.1-mil b/d in June, up 180,000 b/d from May's 1.92-mil b/d.

Saudi Arabia accounted for the biggest single cut, reducing output by 480,000 b/d to 8.62-mil b/d, although it needs to shave output by a further 360,000 b/d odd to reach its 8.256-mil b/d quota. Kuwait also reduced production by a substantial volume, cutting by 160,000 b/d to average 2.16-mil b/d in June, although it failed to bring production within its 2.038-mil b/d quota. Other smaller cuts came from Indonesia, Libya, Qatar, the UAE and Venezuela.

Participants in the survey were generally pessimistic about Venezuela, whose production fell by 50,000 b/d in June to 2.62-mil b/d, a figure some 300,000 b/d below the country's 2.923-mil b/d OPEC quota.

Only Venezuela, Iran and Indonesia produced within their quotas.