Excluding Iraq, which does not participate in OPEC output accords, the 10 members bound by quotas produced an average 25.69-mil b/d in April, down 370,000 b/d from 26.06-mil b/d in March, but 2.19-mil b/d more than their 23.5-mil b/d ceiling, which came into effect April 1.
"These numbers show that OPEC never came close to implementing its 1-million b/d cut in April, and all our early reports for May and even into June show no further significant cuts likely. That's the good news for consumers," said John Kingston, global director of oil for Platts. "The bad news is that we are well into the second quarter, when a hefty level of OPEC production was supposed to collide with the traditional weak demand period and push prices downward. That is obviously not happening, and that's troubling to the economy."
Expectations of a significant cut in actual output had not been high, given historically strong oil prices, which have persisted into the second quarter despite OPEC warnings of a substantial fall in demand. Indeed, several ministers have said since the controversial 1-mil b/d ceiling cut agreement in February that OPEC will supply what the market needs, regardless of what the group's official ceiling might be.
"There may be pressure on OPEC to rethink its output policy," Kingston stated. "Even though it did not cut what it said it would, it still did put less oil on to the market than it had in the prior month."
Only Indonesia, whose crude output is declining, and Venezuela, whose upstream industry has yet to recover fully from a crippling two-month oil strike in the winter of 2002-2003, produced within their official quotas. Iran, Kuwait, Nigeria, Qatar, Saudi Arabia, the UAE and Venezuela cut output by volumes ranging between 10,000 b/d and 140,000 b/d. The biggest single cut came from the UAE, which has been carrying out some offshore maintenance.
Saudi Arabia cut production by 120,000 b/d over the month, but its 8.3-mil b/d April average left the kingdom overproducing its 7.638-mil b/d quota by more than 670,000 b/d. Iran, estimated to have pumped 3.88-mil b/d in April against 3.9-mil b/d in March, overproduced its 3.45-mil b/d quota by 430,000 b/d.
Iraq, which does not have a quota, boosted its average output by 40,000 b/d over the month to produce an average 2.38-mil b/d. Sabotage against oil facilities has continued both north and south, but Iraq intermittently has been able to pump Kirkuk crude along the northern pipeline to Turkish Mediterranean port Ceyhan. April saw 7.6-mil barrels of Kirkuk, sold by tender, lifted from Ceyhan.
OPEC officially is next scheduled to meet June 3 in the Lebanese capital Beirut, but ministers plan to hold informal talks on the sidelines of the International Energy Forum, a meeting of oil producing and consuming countries, which convenes in Amsterdam May 22-24.
OPEC, which has been warning of a price collapse for several months, continues to insist that oil markets are well supplied. But a senior delegate admitted this week that the cartel was "concerned" about the high oil prices, with US light crude futures climbing toward $40/bbl. The delegate, however, declined to discuss whether OPEC might raise its official ceiling at the June meeting.
Country-by-country breakdown of production with figures in millions of b/d: Country Apr 04 Mar 04 Feb 04 Jan 04 Dec 03 Apr 04 Quota Algeria 1.150 1.150 1.150 1.170 1.170 0.750 Indonesia 0.980 0.980 0.990 0.990 1.000 1.218 Iran 3.880 3.900 3.920 3.900 3.850 3.450 Iraq 2.380 2.340 1.900 1.950 1.900 N/A Kuwait 2.210 2.220 2.210 2.230 2.170 1.886 Libya 1.460 1.460 1.460 1.440 1.420 1.258 Nigeria 2.350 2.400 2.340 2.330 2.290 1.936 Qatar 0.740 0.750 0.750 0.750 0.730 0.609 Saudi Arabia 8.300 8.420 8.450 8.530 8.450 7.638 UAE 2.100 2.240 2.220 2.250 2.220 2.051 Venezuela 2.520 2.540 2.540 2.560 2.550 2.704 Total 28.070 28.400 27.930 28.100 27.750 N/A OPEC 10 25.690 26.060 26.030 26.150 25.850 23.500 (excluding Iraq)
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