The survey showed that OPEC-10 production in March exceeded by around half a million barrels per day the new 27.5-mil b/d ceiling agreed at the group's March 16 meeting in Isfahan, Iran, when ministers adopted a Saudi proposal for an immediate 500,000 b/d increase, and was already within a whisker of the 28-mil b/d that will be the group's new ten-member ceiling if a further 500,000 b/d increase currently under discussion is implemented.
"Not all barrels are equal, and while the world certainly needs the additional output from OPEC, the increase is almost certainly close to 100% sour barrels," said John Kingston, global director of oil at Platts. "These crudes generally have a lower gasoline yield, which is less favorable for the market as we move into the heavier gasoline demand season. So the increase will certainly be welcomed by consumers, but these barrels are going to sell for less than $50, and there's a reason for that."
OPEC kingpin Saudi Arabia, which boosted its output by 150,000 b/d to 9.4-mil b/d, provided the biggest single output increase in March. Iranian output rose by 50,000 b/d to 3.98-mil b/d. Other smaller increases totaling 110,000 b/d came from Algeria, Kuwait, Libya and Venezuela. Nigerian, Qatari and UAE production were unchanged from February levels. Indonesian production drifted down to 950,000 b/d. Iraqi output was roughly unchanged at 1.85-mil b/d.
OPEC's steadily rising production means that most member countries are moving close to their output capacity limits, with only Saudi Arabia -- which says it is capable of producing 11-mil b/d but that the market does not currently need this much oil -- having any significant volume of surplus capacity. Indeed, the survey shows that Indonesia and Venezuela are jointly under-producing their new output quotas by close to 1-mil b/d.
Unwilling to tackle the highly political issue of quota redistribution, OPEC has continued to apply any output adjustments on a pro rata basis, a policy that has resulted in Indonesia's March output averaging out at 475,000 b/d below its new 1.425-mil b/d quota and Venezuelan output 465,000 b/d below its 3.165-mil b/d quota. An additional 500,000 b/d hike in the ceiling will make the disparity even more glaring for those two countries.
OPEC president and Kuwaiti oil minister Sheikh Ahmed Fahed al-Sabah said April 4 he had already initiated consultations with other OPEC ministers on whether to implement the 500,000 b/d additional increase provided for by the Isfahan meeting. Sheikh Ahmed said it was his personal view that OPEC should go head with the increase as soon as possible. International oil prices climbed to new all-time highs Monday, when US light crude futures soared to $58.28/bbl and North Sea Brent to $57.65/bbl but have since eased back to between $56 and $57/bbl.
Country-by-country breakdown of production with figures in millions of b/d:
Country Mar 05 Feb 05 Jan 05 Dec 04 Nov 04 Quota Old Quota Algeria 1.300 1.290 1.290 1.290 1.280 0.878 0.862 Indonesia 0.950 0.960 0.960 0.960 0.950 1.425 1.399 Iran 3.980 3.930 3.900 3.900 3.950 4.037 3.964 Iraq 1.850 1.850 1.850 1.840 1.800 N/A N/A Kuwait 2.450 2.430 2.400 2.420 2.420 2.207 2.167 Libya 1.620 1.610 1.610 1.630 1.610 1.473 1.446 Nigeria 2.350 2.350 2.300 2.280 2.380 2.265 2.224 Qatar 0.780 0.780 0.780 0.800 0.800 0.713 0.700 Saudi 9.400 9.250 9.100 9.500 9.500 8.937 8.775 Arabia UAE 2.450 2.450 2.400 2.480 2.480 2.400 2.356 Venezuela 2.700 2.680 2.700 2.650 2.650 3.165 3.107 Total 29.830 29.580 29.290 29.750 29.820 N/A N/A OPEC 10 (excluding Iraq) 27.980 27.730 27.440 27.910 28.020 27.500 27.000
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