OPEC oil production has jumped to its highest in recent history in January as Iran increased sales following the lifting of sanctions and its rivals Saudi Arabia and Iraq also boosted supply, a Reuters survey showed.
Rising output in the Organization of the Petroleum Exporting Countries further aggravates the market share battle between top global producers. In the past year this has flooded the market with new barrels, creating one of the worst oil gluts in history and helping send prices to a 12-year low.
The January supply figures contrast with statements from multiple OPEC officials and recent comments from non-OPEC Russia about the need to cooperate and possibly restrain supply to help oil prices to recover.
“Genuine production cuts are still a very long way off,” said Barbara Lambrecht, an analyst at Commerzbank.
“Although we are convinced that prices will rise in the long term, we nonetheless warn against short-term price falls. After all, Iran and Iraq will soon be opening up new sources of supply which will pump additional oil onto the market.”
Iran provided the biggest increase in supply among the OPEC members, the survey found. Sources familiar with the matter say Iran is reluctant to restrain supply as it wants to recover market share and feels that the economic benefits of lifting sanctions offset the drop in oil prices.
Punitive measures imposed by the United Nations and European Union, and some but not all U.S. sanctions, were lifted on Jan. 16 in return for steps by Iran to scale down its nuclear program under an agreement it struck with world powers last year.
“We have to go back to our share of the market,” said a source familiar with Iranian thinking. “Our economic situation is maybe less affected by the oil price decline, because of the lifting of sanctions.”
OPEC supply has risen in January to 32.60 million barrels per day (bpd) from a revised 32.31 million bpd in December, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants.
December’s total was revised higher because of the return of Indonesia as an OPEC member on Dec. 4. January’s output from the other 12 OPEC members, at 31.90 million bpd, is the highest in Reuters survey records, starting in 1997.
OPEC made a historic policy shift in November 2014 by refusing to cut supply and prop up prices in the hope that lower prices would curb the growth of more costly-to-develop competing supply sources. Since then production from the 12 OPEC members including Indonesia has risen by 1.65 million bpd.
Top exporter Saudi Arabia has boosted output as higher exports offset lower usage in domestic power plants, sources in the survey said. Saudi production reached a record high of 10.56 million bpd in June.
Iraq, the world’s fastest-growing source of supply growth in 2015, also increased output in January, led by higher exports from its southern terminals.
Nigerian output rose due to higher scheduled exports, sources in the survey said, but loading programs suggest this will not be sustained, and will fall next month.