The Organization of the Petroleum Exporting Countries said the
group's production rose to its highest level in more than three
years, despite global oversupply that has helped send prices
tumbling.
In its monthly oil market report, the 12-nation cartel of some
of the world's biggest oil producers said its members pumped 31.51
million barrels a day in July—its highest level since May 2012,
representing an increase of 101,000 barrels a day, compared with
the previous month. That is 1.5 million barrels a day above the
group's stated output ceiling of 30 million barrels a day, which
OPEC endorsed at its last gathering in June in Vienna.
In the past, OPEC has moved to bolster prices by restraining
output. But in the current downward price spiral, the group has
instead moved to protect market share, instead of prices. The move
comes as a flood of new sources of oil-including U.S. shale output
and new OPEC production—has hit the global oil market at a time
when demand forecasts remain cloudy. The result has been a market
oversupply, and sharply falling prices.
In Iraq, OPEC said output rose by 46,700 barrels a day in July
and broke a record at 4.07 million barrels a day. In Saudi Arabia,
the other main driver in OPEC's production growth, crude output
rose by 39,200 barrels a day, to 10.35 million barrels a day, amid
strong domestic demand in the summer season. Angola also increased
its production by 39,700 barrels a day, to 1.78 million barrels a
day.
U.S. production, meanwhile, has proved stubbornly resilient.
OPEC said Tuesday that U.S. production fell by 260,000 barrels a
day in May, but the group said it still sees it rising this year by
nearly a million barrels a day and another 320,000 barrels a day in
2016.
"U.S. production remains near the highest level in four decades,
although the commodity price is telling the U.S. shale sector to
shrink," the group said. The higher output is largely due to
increased cost efficiencies, lower taxes and existing projects
coming on stream, OPEC said. The group said that, for example, in
the prolific North Dakota, many projects can still be profitable at
$24 to $41 a barrel.
OPEC said global oil demand is expected to grow by 1.38 million
barrels a day this year, some 90,000 barrels a day more than it
previously expected. Despite that higher demand, OPEC said
oversupply stood at 2.87 million barrels a day in the second
quarter.
Write to Benoî t Faucon at benoit.faucon@wsj.com
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