Oil production drains to nine-month low

Opec crude oil production declined to a nine-month low in December as Saudi Arabian output dropped to the least in more than a year.

The Khurais oilfield in Saudi Arabia. The kingdom pumped 9.57 million barrels a day in December. EPA / ALI HAIDER
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Opec crude oil production declined to a nine-month low in December as Saudi Arabian output dropped to the least in more than a year.

Output in the 12-member Organization of Petroleum Exporting Countries slipped 110,000 barrels, or 0.3 per cent, to an average 31.434 million barrels per day (bpd) from a revised 31.544 million in November, a Bloomberg News survey of oil companies, producers and analysts revealed.

Brent crude for February settlement rose 49 cents, or 0.4 per cent, to US$111.11 (Dh408.11) a barrel on the London-based ICE Futures Europe exchange.

West Texas Intermediate oil for February delivery gained $1.02, or 1.1 per cent, to $91.82 a barrel on the New York Mercantile Exchange. Brent advanced 3.5 per cent in 2012 while the US grade slipped 7.1 per cent.

"The drop in production is a reaction to weaker demand," said Michael Lynch, the president of Strategic Energy & Economic Research in Winchester, Massachusetts. "You are seeing the Saudis respond to market conditions."

Saudi Arabia, Opec's biggest oil producer, pumped 9.57 million bpd in December, the lowest level since October 2011. Output was down 130,000 bpd from November.

Iranian production fell 40,000 barrels a day to 2.66 million in December. Output had slipped to 2.65 million bpd in October, the lowest level since February 1990. Iran, formerly the group's biggest producer after Saudi Arabia, has dropped to fifth place.

Sanctions aimed at stopping Iran's nuclear programme have hindered its ability to export crude oil. A European Union ban on the purchase, transport, financing and insurance of Iranian oil came into effect on July 1.

"Certain countries have erratic output because of political issues," Mr Lynch said. "For this reason we shouldn't pay as much attention to production changes in countries like Iran and Nigeria."

Nigerian output fell 20,000 bpd to an average 1.89 million in December, the lowest level since October 2009, the report showed.

Iraqi production slipped 50,000 bpd to 3.3 million. Production averaged 3.35 million bpd during the previous three months, the highest level since May 2000. Iraq's output had been depressed since the United States-led invasion in March 2003. Production has surged 600,000 barrels, or 22 per cent, during the past year, the survey shows.

Libyan output climbed 110,000 barrels to 1.54 million bpd in December, the biggest gain in Opec. Production has surged from 45,000 barrels a day in August 2011. Output tumbled last year during the uprising that overthrew the government of Muammar Qaddafi.

The UAE raised output by 50,000 bpd to 2.65 million in December, giving the country the second-biggest production increase in Opec.

Venezuelan production climbed 10,000 bpd to 2.87 million, giving the South American nation the only other advance in the group.

Opec, the provider of about 40 per cent of the world's oil, maintained its official production ceiling at 30 million bpd at a meeting on December 12 in Vienna. Ministers from the group's members are next scheduled to gather on May 31.