OPEC oil output slips from record in Feb – Iran increases supply: survey

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LONDON, Feb 29, (RTRS): OPEC oil output has fallen in February from the highest monthly level in recent history, a Reuters survey found on Monday, due to a halt in Iraq’s northern exports and outages in other producers.

The survey also found stable output in top exporter Saudi Arabia, an early sign that Riyadh is delivering on a Feb. 16 deal along with Venezuela, Qatar and non-member Russia to freeze output and support prices, which hit a 12-year low last month.

Supply from the Organization of the Petroleum Exporting Countries has declined in February to 32.37 million barrels per day (bpd) from a revised 32.65 million bpd in January, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants.

Most of the decline in February output has been involuntary. The biggest drop is in Iraq, OPEC’s largest source of supply growth in 2015, due to the stoppage in flow along the pipeline carrying crude from the Kurdish region.

“The interruption from Kurdistan is significant because they were a big part of the increase in exports from Iraq,” said Olivier Jakob, analyst at Petromatrix. “It is prompt supplies and these are large volumes.”

The pipeline, which had been carrying around 600,000 bpd in recent months, has been offline since Feb. 17 and could be shut until mid-March.

Production also declined in Nigeria, where Royal Dutch Shell’s Nigerian venture suspended the flow of Forcados crude to the export terminal following a spill. The incident added to the impact of lower scheduled exports.

Field maintenance including at the Murban development has reduced output in the United Arab Emirates, the survey found.

Saudi Arabia has kept output steady compared with January at 10.20 million bpd, sources in the survey said, citing stable exports in much of February. Saudi production reached a record high of 10.56 million bpd in June.

Of the countries increasing output, Iran boosted supply further following the lifting of Western sanctions in January. Iran, which wants to recover market share it lost under sanctions, has criticised the production freeze agreement.

Iran has increased supply by 200,000 bpd since December, according to Reuters surveys, while Iranian officials say the country has boosted exports by a much larger 500,000 bpd.

OPEC production has surged since the group in November 2014 abandoned its traditional role of cutting supply alone to prop up prices, in the hope that lower prices would curb the growth of more costly-to-develop competing supply sources.

The extra OPEC barrels have helped to create one of the biggest supply gluts in history, and the production freeze agreed by the three OPEC members plus Russia represents the first global production pact since 2001.

Asian imports of Iranian oil held steady in January from a year earlier, as most of Iran’s biggest crude buyers restrained their purchases until right before sanctions were lifted last month as part of an agreement on Tehran’s disputed nuclear program.

Iran’s rehabilitation in the international commercial system is likely to start feeding through to official buyer’s data from March after loading for exports surged this month and in late January, according to data obtained earlier by Reuters.

Imports by Iran’s four biggest buyers – China, India, Japan and South Korea – came to 981,000 barrels per day (bpd) in January, down 0.1 percent from a year earlier, government and tanker-tracking data show.

The January imports for the four main buyers were down from 2015’s average rate of slightly above 1 million bpd during 2015.

With sanctions lifted after Tehran took the required steps set out in the July agreement with world powers on its nuclear programme, Iran is seeking to ramp up exports to regain market share and help boost an economy that stagnated under the restrictions.

The sanctions kept Iran’s exports at around 1 million bpd – down from an average 2.5 million bpd in 2011 – and have been credited with forcing Tehran to the negotiating table over its disputed nuclear activities.

South Korea’s January imports of Iranian crude more than tripled versus a year ago to about 209,000 bpd last month, the most since February 2014. At the same time, Indian imports slumped 37.6 percent from the year before.

Japan’s purchases of Iranian crude rose more than 10 percent in January from a year earlier to about 194,000 bpd, trade ministry data showed on Monday, the most since March last year.

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