London, 3 August (Argus) — Opec output declined slightly in July, and Iraq overtook Iran as the organisation's second-largest producer.

Iranian output slipped because of an EU embargo that started on 1 July, prohibiting EU insurance firms from covering Iran's crude exports (see below). Overall Opec output fell to 31.41mn b/d in July, which was roughly 80,000 b/d below output in June (see table).

Iran lost its place as Opec's second-largest producer for the first time in 22 years. It produced 200,000 b/d less than in June. A 190,000 b/d rise in Iraq's output in July almost offset the loss of Iranian production. Loadings from southern Iraq rose by just over 210,000 b/d in July, after maintenance to an offshore loading point in June depressed shipments. But exports from northern Iraq were down by around 25,000 b/d last month.

Angola's output fell by 50,000 b/d in July because of a brief gas leak at the Girassol field and upstream maintenance. Libya's output also fell by 50,000 b/d in July. Protests for autonomy in eastern Libya disrupted exports early in the month. And a power generation shortage reduced output from NOC subsidiary Agoco.

Saudi Arabia's output remained roughly unchanged from July at around 10mn b/d. Riyadh is reluctant to reduce output. It wants to ensure that prices do not rise above current levels, damaging the global economy, particularly since the EU debt crisis remains unresolved.

The aim of Saudi Arabia's output policy “is not to aggravate the problems that the world economy is facing”, a Middle East Opec delegate says. It is “too early to say that the time to reduce output has come”, he says. “We do not want prices to rise and harm the global economy.”

Contributory factors
Riyadh is offering the global economy “some kind of an economic stimulus” and is happy with prices around $100/bl, the Opec delegate says, echoing Saudi oil minister Ali Naimi's earlier statements. Riyadh wants “to contribute to global economic growth by keeping oil prices at a suitable level”, he says.

Saudi Arabia, which has a capacity of over 12mn b/d, is the only Opec member that can raise output to help meet any global shortfalls. The IEA says the limited amount of global spare capacity means that even a relatively small crude supply disruption could prompt IEA emergency stock releases.

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Opec wellhead production
mn b/d	Jul	Jun
Saudi Arabia	10.00	10.00
Iran	2.80	3.00
Iraq	3.12	2.93*
Kuwait	2.90	2.90
UAE	2.60	2.50
Qatar	0.73	0.73
Algeria	1.20	1.18
Libya	1.40	1.45
Nigeria	2.16	2.25
Angola	1.65	1.70
Venezuela	2.35	2.35
Ecuador	0.50	0.50
Opec	31.41	31.49*
Ceiling	30.00	30.00
*revised

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