OPEC production highest in 3 years

Output from Iraq, Saudi Arabia and the United Arab Emirates helped boost OPEC oil production to a three-year high, the International Energy Agency said Friday.

The Paris-based IEA said in its market report for June production from the 12-member Organization of Petroleum Exporting Countries reached 31.7 million barrels per day, an increase of 340,000 bpd from May and the highest level in three years.

A survey earlier this week from energy reporting service Platts found OPEC production in June surged for the fourth straight month. Saudi Arabia, the de facto leader of OPEC, produced an average 10.3 million bpd in June and Iraq increased production by 330,000 bpd to more than 3 million bpd.

The IEA added output from the U.A.E. helped stimulate overall production from the 12-member group.

OPEC, in its monthly market report for May, said production outside the group was expected to grow by 680,000 bpd, well below last year's growth of 2.17 million bpd.

In its report, IEA said the growth in global oil production was "impressive," with OPEC accounting for about 60 percent of the year-on-year gains. Outside of OPEC, the situation was bogged down by the pressure from a weak crude oil market.

"Non-OPEC supply growth is expected to grind to a halt in 2016, as lower oil prices and spending cuts take a toll," the monthly market report said.

Low oil prices, down about 40 percent from June 2014, has forced energy companies to spend less on exploration and production, the upstream side of the energy sector. A monthly survey from oil services company Baker Hughes finds upstream activity increased only in the Middle East and Africa.

The upstream sector is nevertheless stabilizing and short-term production levels are on the rise. The U.S. Energy Information Administration in a weekly report released Wednesday said the 9.6 million bpd production from U.S. basins for the week ending July 3 was 13.3 percent higher year-on-year.

EIA Administrator Adam Sieminski said the expected 2015 average of 9.5 million bpd is the highest production level in 45 years. A decline, however, is expected through 2016 as a result of low oil prices and drilling activity.