Survey says OPEC output surges to 27.92 MBPD in August

OPEC's daily crude production surged by close to a million barrels in August as Iraqi volumes recovered toward levels seen before Baghdad's five week export stoppage earlier this summer, according to OPEC and oil industry officials surveyed by Platts.

The survey showed that the 11 members pumped an average 27.92 million barrels per day (MBPD) in August, up 980,000 MBPD from July's 26.94 MBPD.

Excluding Iraq, which does not have an OPEC quota, output from the remaining 10 members rose by 180,000 BPD, from 24.87 MBPD in July to 25.05 MBPD in August. This left OPEC members 849,000 BPD above their self-imposed 24.201-MBPD output ceiling that expired Aug 31.

An even lower ceiling of 23.201 MBPD, agreed July 25 after telephone consultations, came into effect Sept. 1. OPEC will have to slash output by close to 2 MBPD if it is to meet the new ceiling.

``The gap between the new ceiling and actual production creates a dilemma for OPEC,'' commented John Kingston, global director of oil for Platts. ``With signs of a global economic slowdown and the inevitable decline in demand that comes with it, the group may need to cut in order to meet its stated goal of keeping prices at current levels. On the other hand, declining demand at still healthy prices creates an incentive to violate individual quotas and grab additional sales and revenue, which could create a vicious downward cycle. There are plenty of countries with spare production capacity. We'll need to see how they use it.''

Iraq accounted for the bulk of the 980,000 BPD increase, about 800,000 BPD, having boosted output from 2.07 MBPD in July to 2.87 MBPD in August. Iraqi output fell to 1.1 MBPD in June after Baghdad's decision to halt exports from June 4 to protest proposed changes in the UN's oil-for-aid program.

Other smaller increases totaling 230,000 BPD from Saudi Arabia, Iran, Kuwait, Libya, Nigeria and Qatar were partially offset by cuts totaling 50,000 BPD from Indonesia, the UAE and Venezuela. Only Indonesia produced within quota.

OPEC ministers are scheduled to meet Sept. 26 in Vienna but are not expected to adjust quotas. The group's Algerian president Chakib Khelil suggested in August that OPEC's next output review would take place in November at a meeting yet to be fixed. OPEC's crude basket has averaged $24.75 per barrel for the year to date, close to the semi-official $25 per barrel target. (*)