The May average already leaves the OPEC-10 pumping more than the two new 25.5- and 26-mil b/d output ceilings, agreed June 3 in the Lebanese capital Beirut, which come into effect July 1 and August 1 respectively. The survey also shows that the OPEC-10 exceeded their current 23.5-mil b/d ceiling by 2.86-mil b/d, or 12.2 percent.
Including Iraq, which does not have a quota, OPEC's 11 members produced an average 28.26-mil b/d of crude in May, up 190,000 b/d from April's 28.07-mil b/d, or 0.7 percent.
Only Venezuela and Indonesia pumped within their current quotas under the 23.5-mil b/d ceiling; the former having lost output capacity as a result of the two-month strike in the winter of 2002/2003 that reduced production to a trickle, and the latter seeing its production capacity decline to the extent that it is now a net importer of crude. Almost all other member countries exceeded not only their current quotas but also the new quotas scheduled to come into effect in July and August.
"Since these numbers are monthly averages, they don't tell the story that the Saudis are well over the monthly average in the Platts survey, and appear to be solidly above 9-mil b/d now," said John Kingston, director of oil at Platts. "Market reports we are getting from Saudi buyers make it clear that the Saudis are putting more oil on the market, and doing it quickly. The key issue from the perspective of consumers now will not be so much on crude, but the focus may shift to heating oil. It's clear that the market is now worried that with refiners pumping out so much gasoline, stocks of heating oil and other distillates, such as diesel, will not build back to sufficient levels."
The high crude prices which have prevailed since late last year have allowed OPEC to turn a blind eye to overproduction. That tacit acceptance of leakage beyond official levels is set to continue for the time being, according to OPEC sources.
Analysts are predicting that June volumes from OPEC, including Iraq, will exceed 29-mil b/d, in line with the cartel's plans to boost output and cool down oil prices. Saudi Arabia, according to its oil minister Ali Naimi in May, has allocated 9.1-mil b/d in June crude sales both inside and outside the kingdom. The UAE also has pledged additional barrels-400,000 b/d-in June but has not specified the level from which it will increase.
Country-by-country breakdown of production with figures in millions of b/d: Country May 04 Apr 04 Mar 04 Feb 04 Quota- Quota- Quota- Apr 1 Jul 1 Aug 1 Algeria 1.170 1.150 1.150 1.150 0.750 0.814 0.830 Indonesia 0.970 0.980 0.980 0.990 1.218 1.322 1.347 Iran 3.920 3.880 3.900 3.920 3.450 3.744 3.817 Iraq 1.900 2.380 2.340 1.900 N/A N/A N/A Kuwait 2.300 2.210 2.220 2.210 1.886 2.046 2.087 Libya 1.470 1.460 1.460 1.460 1.258 1.365 1.392 Nigeria 2.350 2.350 2.400 2.340 1.936 2.101 2.142 Qatar 0.760 0.740 0.750 0.750 0.609 0.661 0.674 Saudi Arabia 8.600 8.300 8.420 8.450 7.638 8.288 8.450 UAE 2.260 2.100 2.240 2.220 2.051 2.225 2.269 Venezuela 2.560 2.520 2.540 2.540 2.704 2.934 2.992 Total 28.260 28.070 28.400 27.930 N/A N/A N/A OPEC 10 26.360 25.690 26.060 26.030 23.500 25.500 26.000 (excluding Iraq)
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