OPEC oil output reached the highest monthly level in recent history in July, a Reuters survey found on Friday, as Saudi Arabia and other key members show no sign of wavering in their focus on defending market share instead of prices.
The latest boost from the Organization of the Petroleum Exporting Countries adds to excess supply in the market without the significant rise in demand OPEC hopes will happen in the second half of the year and in 2016.
OPEC supply has risen in July to 32.01 million barrels per day (bpd) from a revised 31.87 million bpd in June, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants.
The group has upped production by more than 1.7 million bpd since it decided in November 2014 to defend market share against rising output from rival producers. This month’s deal between world powers and Iran over Tehran’s nuclear work could further add to supplies in 2016.
Oil prices have dropped more than 15 percent this month and halved in the past year. Some analysts say there are signs OPEC’s efforts to discourage growth in more expensive-to-develop rival supply sources are bearing fruit.
“We believe that oil prices should stabilise in the near future because we are confident that OPEC’s strategy will pay off in the sense that non-OPEC production will slow,” said Eugen Weinberg of Commerzbank.
OPEC shows no sign of changing course despite the price drop. Secretary-General Abdullah al-Badri, on a visit to Moscow on Thursday, dampened the prospect of output cuts and said the market could absorb extra oil from Iran.
If the total remains unrevised, July’s supply would be OPEC’s highest since 2008 – when oil prices hit a record $147 a barrel before collapsing, and production was above 32 million bpd until Indonesia left the group at the end of the year.
July’s output from OPEC’s current 12 members is their highest since Reuters survey records began in 1997.
The biggest increase in July has come from Iraq, one of the main drivers of the rise in OPEC output this year.
Exports from southern Iraq have climbed above 3 million bpd and shipments from Iraq’s north via Ceyhan in Turkey remain close to June’s levels despite tensions between Baghdad and the Kurdistan Regional Government over budget payments.
Those tensions do not appear to have significantly curbed actual export volumes, although a sabotage attack on the pipeline carrying crude to Turkey from Iraq earlier this week halted pumping, highlighting the potential for disruption.
Top exporter Saudi Arabia has kept output steady or higher than in June, which was a record, sources in the survey said, as Riyadh meets higher demand internationally and from domestic power plants and refineries.
Iran, eager to reclaim its traditional spot as OPEC’s second-largest producer if and when sanctions are lifted, increased supply slightly in July with a sale of crude from floating storage.
The only significant decline in output occurred in Libya, where supply remained disrupted by unrest and negotiations to reopen closed oil facilities had yet to succeed.
Demand for OPEC oil is expected to rise in the second half of the year as global consumption reaches its annual peak.
In 2016, OPEC forecasts demand for its oil will be nearly 1 million bpd higher than in 2015 due to an increase in world demand growth and a slowdown in supply growth from countries outside the group.
While Commerzbank said it was hopeful OPEC would agree to tighten supplies at its next gathering in December, some OPEC delegates are bracing for a difficult meeting as they see little appetite for cutbacks.
“I believe the Saudis and Gulf states will stick to their strategy of market share,” said a delegate from outside the Gulf. “The next OPEC meeting will be hard and crucial for the organisation.”