Iraq, Saudi Arabia and the UAE produced record amounts of crude oil as global supplies surged demand weakened putting further downward pressure on oil prices.

The rise in output from the Gulf meant OPEC supply rose by 340,000 b/d in June to a three-year high of 31.7 million barrels a-day (mb/d), reports the International Energy Agency in its Oil Market Report for July. The increase meant that OPEC output stood 1.5 mb/d above the previous year.

Higher output from both OPEC and non-OPEC producers meant global oil supply surged by 550 000 barrels a-day (b/d) to 96.6 mb/d – 3.1 mb/d higher than in June 2015. Opec could lost 5 per cent of its market share by 2018 as new trading patterns threaten its position, according to a forecast by Deloitte Middle East. The current phase of lower oil and gas prices is unlikely to affect the long-term trajectory of the sector in the Middle East, the firm added.

Global oil demand growth is forecast to slow to 1.2 million barrels a-day (mb/d) in 2016, from an average 1.4 mb/d this year, despite strong consumption expected from parts of Asia. The IEA report adds that world oil demand growth appears to have peaked in the first quarter of 2015 at 1.8 mb/d and will continue to ease throughout the rest of 2015 and into 2016.

Oil prices softened slightly during June. On 1 June Brent crude traded at $64.88 a barrel. On 30 June the price was $63.59. Prices have weakened more sharply during July. By 10 July prices had fallen to $58.73 a barrel as the global economic outlooks weakened due to the ongoing debt crisis in Greece and sharp falls on the Chinese stock markets.