OPEC capacity limits start to bite: 'MEES'

OPEC capacity limits start to bite: 'MEES'

NICOSIA (Reuters): OPEC oil production edged up by 100,000 barrels per day (bpd) to 28.10 million bpd in July, with output capacity constraints starting to limit flows from the cartel, the Middle East Economic Survey (MEES) said on Monday.

The industry newsletter said output from the 10 members of the Organization of the Petroleum Exporting Countries taking part in production restraint excluding Iraq climbed by 200,000 bpd to 25.66 million bpd.

That July total was 260,000 bpd above the 25.40 million bpd production ceiling agreed at a June OPEC meeting.

The newsletter said the production figures demonstrated how production capacity constraints had begun to crimp OPEC output, with half of the additional crude coming from Saudi Arabia.

It said two countries, Indonesia and Nigeria, did not reach their new quotas.

Capacity-constrained Indonesia produced 1.3 million bpd, the same as in June despite the increase in its quota to 1.317 bpd.

Nigeria, because of industrial and security problems, pumped 2.0 million bpd compared to 2.03 million bpd in June, less than its new quota of 2.091 million bpd.

MEES said Algeria, Kuwait, the United Arab Emirates and Venezuela made only small output increases, while Libya and Qatar remained unchanged.

Saudi Arabia lifted output by 100,000 bpd to 8.350 million bpd, the newsletter said.

Iran's crude production rose by 30,000 bpd to 3.72 million bpd in July, on target for its new output ceiling of 3.727, pumping 2.32 million bpd of exports and 1.40 million bpd to its domestic refineries.

Iraqi production declined because of marketing problems to 2.44 million bpd in July from 2.54 in June, MEES said, with Baghdad supplying 1.84 million bpd for export and 600,000 bpd for domestic consumption and border trade.

The newsletter said Iraqi output was expected to increase substantially in August, rising by around 400,000 to 500,000 bpd.

Separately OPEC said that the price of basket of seven crudes fell to $27.94 on Friday from $28.17 the previous day.

That takes the price back into the group's target $22-$28 price band after it overshot the higher end of the range for one day on Thursday .

Under an informal mechanism agreed between OPEC producers in June, if the basket stays above the $22-$28 band for 20 working days or below the range for 10 working days, crude production will be adjusted by 500,000 barrels a day either way to try to bring the price back into the range.

The OPEC basket comprises Algeria's Saharan Blend, Indonesia's Minas, Nigeria's Bonny Light, Saudi Arabian Light, Dubai of the UAE, Venezuela's Tia Juana and Mexico's Isthmus.