Opec has warned that the Brexit vote will weigh on European oil demand as it pumps more oil than at any time in recent history

Billy Bambrough
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Opec is still no closer to cutting out put as it fights to defend its market share (Source: Getty)

Diminished former oil cartel Opec has cautioned the UK's recent vote to quit the European Union could dampen oil demand across the continent.

The warning comes alongside data that showed Opec countries between them pumped more oil than at any time in recent history, sparking fears the supply glut may not clear in the second half of the year.

The Organization of Petroleum Exporting Countries delivered nearly 32.9m barrels of oil a day in June, up about one per cent on May, according to its monthly statistical bulletin.

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The group – lead by Saudi Arabia – said the Brexit vote could hit global economic growth in 2017, with the risk to Europe higher and potentially sending demand for oil lower.

Its global growth forecast in 2017 has been downgraded to three per cent from 3.1 per cent in 2016.

Growth in the eurozone was chopped for this year to 1.2 per cent, from 1.5 previously. European oil demand represents around 14.5 per cent of the global total.

Europe is expected to guzzle 13.74m barrels a day this year, only slightly up from the 13.71m barrels a day in 2015.

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Nigeria was the Opec member that increased its output the most in June. Attacks on oil infrastructure carried out by anti-government rebels severely disrupted Nigeria's supply in previous months.

Iran is also ramping up production as it tries to regain market share after years of global nuclear sanctions artificially stifled its output. The sanctions were lifted in January.

Iran produced just over 3.6m barrels a day in June, up 78,000 barrels a day on the prior month.

Other big Opec Gulf producers, including Kuwait, Saudi Arabia and the United Arab Emirates, also upped production.

Non-Opec supply – which includes output from the likes of the US, Russia, and the North Sea – oil supply is projected to decline by 110, 000 barrels a day in 2017, to average 55.92m barrels a day.

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Non-Opec oil production – mainly through shale oil drilling – is more expensive than in Opec countries and is more sensitive to the lower price.

Oil prices have slipped from around $115 per barrel in the summer of 2014 to around $46 currently. The price has recovered somewhat from lows of $27 per barrel in February this year as shale production eases and the market bets on a pick up in demand in the second half of the year.

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