LONDON, (Reuters) – Extra crude from Iraq and Saudi Arabia has helped cover for tighter sanctions on Iran, whose own oil output has hit the lowest in two decades, and OPEC’s April output is its highest since 2008, a Reuters survey found on Monday.
A long-awaited expansion in Iraq’s oil export capacity and steadily climbing output from top world exporter Saudi Arabia are cushioning the impact of a European Union plan to embargo Iran’s crude, which has helped support oil prices this year.
“Without this extra crude, the embargo would have been a much more expensive policy, increasing supply worries and pushing prices up further,” said Samuel Ciszuk, a consultant at KBC Energy Economics.
“The fact that we are getting additional supply from Iraq and continued high output from Saudi Arabia, the UAE and Kuwait does make it easier.”
April supply from the 12-member Organization of the Petroleum Exporting Countries averaged 31.75 million barrels per day (bpd), up from a revised 31.32 million bpd in March, the survey of sources at oil companies, OPEC officials and analysts found.
Oil prices surged in March to $128 a barrel, the highest since 2008, because of concern about possible supply shortages. Prices have since fallen back and Brent crude was trading just below $120 on Monday.
OPEC’s total is the highest since September 2008, which was shortly before it agreed to a series of supply curbs to combat recession and collapsing demand, based on Reuters surveys.
In April, the biggest increase in OPEC supply came from Iraq as a second new Gulf shipping outlet provided a boost to export capacity. Production topped 3 million bpd and rose by 230,000 bpd from last month.
Saudi Arabian supply edged up in April to 10.0 million bpd, the survey found. Some customers say the kingdom, which has said it wants to see lower oil prices, has been offering them extra crude.
The extra oil is filling gaps caused by an unusually large amount of supply outages globally, which have also helped support prices. Supply breaks were running at nearly 1.3 million bpd as of early April.
“There’s plenty of oil in the market,” said Paul Tossetti, an analyst at PFC Energy. “But there has been a lot of non-OPEC outages, which have continued to tighten supplies.”
In Iran, which faces the EU ban from July, output fell significantly in April for a second month, according to oil industry sources outside the country.
“Iran is running into problems – they are storing rather than selling,” said Roy Mason of Oil Movements, a UK-based consultant which estimates OPEC exports.
Iran’s supply declined to 3.15 million bpd in April, according to the survey. That would be the lowest output in Iran since it produced 3.088 million bpd in 1990, according to figures from the U.S. Energy Information Administration.
Two Iran-based shipping sources told Reuters last week Iran has been forced to deploy more than half its fleet of supertankers to store oil at anchorage in the Gulf as buyers of its crude cut back.
Europe and the United States are trying to squeeze the revenues Iran makes from its oil exports to force it to halt a nuclear programme they fear will be used to make weapons, but which Tehran says is for power generation.
In March, Iran’s exports posted the first sizeable decline since the EU announced in January its embargo plan.
OPEC at a meeting in December set a target to produce 30 million bpd, settling an argument which broke out in 2011 after Iran and other members opposed a Saudi-led plan to raise OPEC’s production ceiling.
Output has remained above the target all year as Libyan supply recovered after being virtually shut down during the 2011 uprising against Muammar Gaddafi’s rule.
Supplies also rose in April from OPEC’s two West African members, Angola and Nigeria. Loading schedules point to higher production in Nigeria, and little change in Angola, next month.