OPEC may boost oil output to record with Iran back amid glut

HASHEM KALANTARI

TEHRAN, Iran (Bloomberg) -- OPEC could potentially boost crude oil production to 33 MMbopd, the most ever, after international sanctions are removed against Iran amid a global supply glut, according to the country’s OPEC representative.

The global oil market is already in surplus by about 3 MMbopd, with Saudi Arabia and Iraq responsible for OPEC’s oversupply in the past six months, Iran’s state-run Islamic Republic News Agency reported Sunday, citing Mehdi Asali. Iran can boost output by 500,000 bpd within one week after sanctions are lifted, Oil Minister Bijan Namdar Zanganeh said earlier this month.

Crude has lost half its value in the past year as U.S. production jumped to the highest level in more than 40 years and Saudi Arabia had record output. Prices collapsed after OPEC decided on Nov. 27 to maintain production, rather than sacrifice market share.

Brent oil futures closed at $49.19/bbl on Friday, down 14% for this year. High supplies in North America and OPEC, lack of demand growth and the strengthening dollar are all cause for the lower oil prices, Asali said.

OPEC pumped 32.1 MMbopd in July, the 14th consecutive month that the 12-nation group has produced more than its collective target of 30 MMbbl, data compiled by Bloomberg show. The 12-member group’s all-time high output was 32.8 MMbbl set in July 2008, the data shows.

Iran made a “big mistake” when it backed OPEC’s decision in December 2011 to discard individual production quotas, Asali said. That allowed Saudi Arabia, Kuwait and other members to take over Iran’s share, which was diminishing because of sanctions, he said.