June 30 (Bloomberg) -- OPEC crude production climbed for a second month in June as gains in Saudi Arabia and Nigeria made up for the loss of Iraqi barrels, a Bloomberg survey showed.
Production by the 12-member Organization of Petroleum Exporting Countries rose by 278,000 barrels a day to 30.223 million, according to the survey of oil companies, producers and analysts. Last month’s total was revised 43,000 barrels a day lower to 29.945 million because of changes to the Kuwaiti, Libyan and Ecuadorian estimates.
Violence flared in Iraq, OPEC’s second-biggest producer, this month as a militant group seized Mosul, the country’s biggest northern city, and advanced south toward Baghdad. Fears that the upsurge may ignite a civil war sent prices higher.
“There was panic when the first headlines came from Iraq,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “There may have been an overreaction elsewhere. Things have stabilized and it doesn’t appear that all of those additional barrels will be needed.”
Brent crude for August settlement dropped 94 cents, or 0.8 percent, to close at $112.36 a barrel on the London-based ICE Futures Europe exchange. Brent, the benchmark for more than half the world’s oil, reached $115.71 on June 19, the highest level since Sept. 9. West Texas Intermediate oil fell 37 cents, or 0.4 percent, to settle at $105.37 on the New York Mercantile Exchange.
Iraqi production tumbled 400,000 barrels a day to 2.9 million this month, according to the survey. It was the biggest drop in June and left the country pumping the least oil since September.
The fighting hasn’t spread to southern Iraq, home to about three-quarters of the nation’s oil output.
The production cuts occurred in the north, where the pipeline from Kirkuk to Ceyhan on Turkey’s Mediterranean coast has been shut since March because of sabotage. The missing output would have supplied Iraqi needs. The 310,000-barrel-a-day Baiji refinery, Iraq’s biggest, has been closed since militants first attacked it on June 15.
“It looks like Iraq will continue to pump between 2.5 and 3 million barrels a day as long as the situation doesn’t get a lot uglier,” Yawger said. “The missing oil was mostly meant for domestic use anyway.”
Saudi Arabia, the group’s biggest producer, boosted output by 230,000 barrels a day to 9.9 million. That was the highest level since September, when the desert kingdom pumped 10 million barrels a day, the most in monthly data going back to 1989.
Fuel consumption in the Arabian peninsula peaks in the summer months, when high temperatures lead to increased use of air conditioners.
“They usually produce more in the summer to directly burn for electricity that’s needed for air conditioning,” said Mike Wittner, the head of oil market research at Societe Generale SA in New York. “I also expect them to keep increasing production to meet global demand.”
Saudi Arabia is pumping additional oil for storage to keep the market comfortable about supply. The country holds 2.6 million barrels a day of spare crude production capacity, according to data compiled by Bloomberg.
“We are going to see new records from the Saudis in the months ahead,” Wittner said. “They will have to pump at least 10.2 million barrels a day or more in the third quarter. They can easily attain this.”
Nigeria’s production rose 200,000 barrels a day to 2.15 million in June, the second-biggest gain in the survey. It was the highest output since September. Figures for Africa’s biggest producer are volatile because of unrest and theft in the Niger River delta, the main oil-producing region.
Crude production in the United Arab Emirates climbed by 100,000 barrels a day to 2.8 million this month, the most since October. Output climbed on higher exports to Asia to meet summer demand there.
OPEC ministers kept their output target unchanged at 30 million barrels a day on June 11 in Vienna. The group next meets on Nov. 27.
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