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OPEC pumped the most crude last month in more than three years as Iran restored output to the highest level since international sanctions were strengthened in 2012.

The Organization of Petroleum Exporting Countries, responsible for 40 percent of world oil supplies, raised output by 100,700 barrels a day to 31.5 million last month, the group said in its monthly market report, citing external sources. This increase came even as Saudi Arabia, which often curbs output toward the end of peak summer demand, told OPEC it cut production by the most in almost a year.

Oil prices slumped to a six-month low below $50 a barrel in London last week as rising OPEC supplies, resilient U.S. production and concerns over Chinese demand prolong a global glut. Iran may further expand output after reaching an accord with world powers on July 14 that will ease sanctions on oil exports later this year in return for curbs on its nuclear activity.

“Iran has been rising slowly but surely for a while now,” Abhishek Deshpande, an analyst at Natixis SA in London, said by e-mail. “It doesn’t need foreign investment to revamp existing infrastructure and prepare fields, resulting in the small increases you can see now. But the bulk of the increase is expected once it becomes clear sanctions will definitely be lifted.”

Iran Revival

Oil resumed its slide Tuesday, reversing the biggest rally in a month. West Texas Intermediate futures declined as much as

Source: OPEC

4.4 percent to $42.98 a barrel on the New York Mercantile Exchange, close to a five-month low.

Iran increased output by 32,300 barrels a day in July to

2.86 million a day, the highest since June 2012, according to data OPEC compiles from “secondary sources” such as media agencies and international institutions. Sanctions to deter the nation’s nuclear research took effect in July that year.

Iraq, OPEC’s second-largest producer, led gains in output last month, increasing production by 46,700 barrels a day to 4.1 million, the group’s data show.

The report also includes data directly submitted by OPEC’s 12 members. In these figures, Saudi Arabia said it reduced output in July by 202,700 barrels a day to 10.36 million. That’s the biggest reduction since August 2014. A group total was unavailable for these statistics because Libya didn’t provide a production estimate.

“Domestic consumption in Saudi Arabia already peaked in June,” Giovanni Staunovo, an analyst at UBS Group AG in Zurich, said by e-mail. The pullback “might also be related to challenges in keeping exports elevated in an environment where other OPEC countries also fight for market share.”

Demand Outlook

OPEC increased estimates for global oil demand in 2016 by about 100,000 a barrels a day. World consumption will climb by

1.3 million barrels a day, or 1.4 percent, to 94 million barrels a day in 2016. The growth rate is slightly lower than this year’s projected 1.5 percent expansion.

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“Crude oil demand in the coming months should continue to improve and, thus, gradually reduce the imbalance in oil supply-demand,” OPEC’s Vienna-based secretariat said in the report.

Investor concern that oil could by dragged down further by an Iranian sale of crude inventories once sanctions are lifted is overdone, according to a Bloomberg Intelligence survey published Tuesday. Iran’s stockpile of crude amounts to 20 to 40 percent of one day’s global oil demand and the nation will add less than 1 million barrels a day to crude supply next year, most of the survey’s 121 respondents said.

OPEC boosted forecasts for supplies from outside the group in 2015 by 90,000 barrels a day, while trimming them for next year by 40,000 a day. Non-OPEC suppliers will raise output by 960,000 barrels a day this year to 57.46 million a day. Increased estimates for U.S. production bolstered this year’s outlook, it said.

(Updates oil price in fifth paragraph.)