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OPEC is paring production but still is falling short of pledged cuts.
Middle East Economic Survey estimates OPEC's total production in July averaged 27.485 million b/d. This is a significant fall from the June total of 28.257 million bid, but adrift from the 24.387 million bid target, excluding Iraqi production, set in June (OGJ, June 29, 1998, p. 28).
Nevertheless, MEES thinks oil producers can take a little comfort from Saudi Arabia's decision to cut September crude deliveries to term customers by 18% of contract volumes. Saudi Aramco reportedly invoked a clause in its contracts enabling supply volumes to be reduced if government policy changes because of a lack of reaction by oil markets to output cuts.
Meanwhile, the U.N. says Iraq has sold only $1.06 billion worth of crude so far for the May 30-Nov. 25 period of the latest oil-for-aid deal. Iraq was expected to sell $4 billion worth for the period under a U.N. resolution that lets it export $5.2 billion worth of oil every 6 months to buy food and medicine.
Baghdad claims it cannot meet the monetary targets because oil prices have plunged--dated Brent has rarely crept above $12/bbl in the last few weeks--and because its oil production and export facilities are in disrepair.
Kuwait's oil sector appears to be undergoing a major reorganization. …