OPEC oil production declined for a second month in July as Iranian output tumbled to a 22-year low, a Bloomberg survey showed.
Production fell 393,000 barrels, or 1.2 percent, to an average 31.165 million barrels a day this month from 31.558 million in June, according to the survey of oil companies, producers and analysts. It was the second straight decrease after daily output reached 31.62 million barrels in May, the highest level since October 2008.
Iran pumped 2.86 million barrels a day, down 300,000 barrels from June and the lowest level since February 1990. The Islamic republic was the third-biggest producer the Organization of Petroleum Exporting Countries in July, after Saudi Arabia and Iraq. Iran had been the second-biggest since May 2000.
“Increasing sanctions are going to result in further declines in Iranian oil production,” said Rick Mueller, a principal with ESAI Energy LLC in Wakefield, Massachusetts. “The Iranians are going to struggle to find buyers and will have to shut in production. There are only so many countries that are willing to go against both the U.S. and Europe and purchase Iranian oil.”
A European Union ban on the purchase, transport, financing and insurance of Iranian oil began on July 1. Sanctions aimed at stopping Iran’s nuclear program have curbed investment in infrastructure and hindered the country’s ability to export.
“Iran output fell fairly sharply,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It’s unclear how much Iranian oil is going into storage because of a lack of customers.”
Saudi Arabia increased output by 50,000 barrels a day to 9.88 million this month. The desert kingdom pumped 9.9 million barrels a day in May, the highest level since at least 1989.
Iraqi production decreased 10,000 barrels to 2.95 million a day this month. Output in April surged to 2.98 million barrels a day, the highest level since October 2000. The country’s production had been depressed since the U.S.-led invasion in March 2003.
“Iraqi production continues to increase, which will mitigate the impact of Iranian cuts,” Mueller said.
Nigeria and Angola, Africa’s biggest oil producers, had the second- and third-biggest output declines in OPEC this month, according to the survey. Nigeria’s production slipped 75,000 barrels a day to 2.105 million. Angola pumped 1.725 million barrels a day, down 65,000 barrels from June.
Libyan output rose 25,000 barrels to 1.45 million this month, the highest level since January 2011, the survey showed. It was the second-biggest gain after Saudi Arabia. Production tumbled to 45,000 barrels a day in August 2011 from 1.585 million that January, the last month before an uprising that overthrew the government of Muammar Qaddafi disrupted output.
Venezuelan production climbed 15,000 barrels a day to 2.37 million in July, the highest level since February 2008, the survey showed.
OPEC, provider of about 40 percent of the world’s oil, maintained its official production ceiling at 30 million barrels a day at a meeting in Vienna on June 14. Ministers from the group’s 12 members are next scheduled to gather on Dec. 12.