London, 5 October (Argus) — Opec production fell to an eight-month low in September because of lower output by west African members.

Maintenance in Angola and lower exports from Nigeria more than offset an increase in UAE and Kuwaiti output and a rise in Iraqi production to a post-war high of 3.2mn b/d, pushing Opec output to its lowest since January. Reduced Opec production threatens to exacerbate concerns over supply and high oil prices, which prompted G7 finance ministers in August to raise the issue of a strategic stocks release.

Saudi Arabia and Opec will ensure that the market is well supplied and prices do not get out of control, Saudi oil minister Ali Naimi told an international energy congress in Turkey on 4 October. “Saudi Arabia, through its initiative and in collaboration with others, worked hard to allay concerns over supply and help bring the price down to reasonable levels,” Naimi says. “Those concerns have not entirely disappeared, so I would like to repeat the point, here today. There is no shortage of oil, inventories remain adequate and any additional demand can — and will — be met.”

Saudi Aramco has been asking its customers if they want more oil. The move is part of Saudi Arabia's efforts to bring the oil price down to around $100/bl, a level that most Opec member countries consider ideal, a Mideast Gulf source says. Libyan officials say they want an oil price of $100-110/bl.

Saudi Arabia had been cutting crude prices to stimulate demand among more marginal refiners. Aramco lowered official formula prices for heavier crudes to US and Asian customers in September and to all destinations for October.

The firm has since increased formula prices for November-loading heavier grades to some destinations. And Saudi production has fallen from a 10mn b/d peak in May-June this year now that the country's peak power demand period is coming to an end. Exports from the Mideast Gulf have shown no sign of increasing and are even falling in early October, according to consultancy Oil Movements.

But demand growth is rising and refiners are starting to run down the crude stocks they built up earlier this year as they increase products inventories. Global oil demand is expected to rise by 1.1mn b/d this year, whereas non-Opec supply is forecast to increase by only 400,000 b/d. EU and US sanctions are likely to continue to weigh on Iranian oil output, leaving the market vulnerable to further supply disruptions against a backdrop of lower Opec spare capacity.

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Opec wellhead production
mn b/d	Sep	Aug
Saudi Arabia	9.8	9.85
Iran	2.7	2.7
Iraq	3.2	3.12
Kuwait	3	2.9
UAE	2.63	2.55
Qatar	0.73	0.73
Algeria	1.18	1.2
Libya	1.5	1.42
Nigeria	2.2	2.35
Angola	1.6	1.85
Venezuela	2.3	2.35
Ecuador	0.5	0.5
Opec	31.34	31.52
Ceiling	30	30

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