The 13 members of the Organization of the Petroleum Exporting Countries (OPEC) pumped an average 32.26 million barrels per day (b/d) of crude oil in October, according to a Platts survey of OPEC and oil industry officials just released. This is a 210,000 b/d decline from the September level of 32.47 million b/d.
Excluding Iraq, production from the 12 members hitherto bound by output agreements fell by 220,000 b/d, to 29.96 million b/d from 30.18 million b/d, the survey showed.
When Indonesia, which will leave OPEC at year end is also excluded, the survey shows a 210,000 b/d drop in production from the so-called OPEC-11, to 29.11 million b/d in October from the previous month's 29.32 million b/d.
OPEC's new output target as of November 1, which excludes both Indonesia and Iraq, is 27.308 million b/d, following the group's October 24 decision to cut official production allocations by 1.5 million b/d in hopes of preventing a big supply overhang from building.
“Even if OPEC cuts 1.5 million b/d from current levels, it still puts the organization’s output above what the International Energy Agency says the market needs for supply and demand to remain balanced in the first half of 2009," said Platts Global Director of Oil John Kingston.
"The IEA most recently has estimated that OPEC needs to produce 30.6 million b/d in the first quarter to balance demand, and 30 million b/d in the second quarter. A 1.5 cut from the most recent Platts’ survey estimate would bring the organization close to that number in the first quarter, but still put it over in the second.” A cut of 1.8 million b/d is likely required, he says.
There is still question as to how much Saudi Arabia, OPEC's biggest producer, intends to cut. Having increased output unilaterally over several months since the spring, citing increased customer demand rather than an effort to stem the oil price climb that eventually peaked in early July above $147/barrel, the kingdom has been reducing production over the past three months, albeit not to the level of its 8.943 million b/d allocation. It reduced volumes by 100,000 b/d in October to 9.4 million b/d.
If Saudi Arabia is to meet its new 8.477 million b/d allocation as of November 1, it will need to slash production by more than 900,000 b/d.
One industry participant in the survey suggested that Saudi Arabia, rather than make a deep cut, was aiming to reduce supply to particular customers that might more readily accept reduced volumes than others.
UAE output fell by 80,000 b/d to 2.55 million b/d, largely the result of maintenance that will stretch through November. Iranian output also fell by 80,000 b/d, to 3.9 million b/d. Other smaller drops came from Algeria, Kuwait, Qatar, Venezuela and Indonesia.
Angolan output recovered to 1.87 million b/d as production restarted from BP's Greater Plutonio development. Production was shut down in August after a fault was discovered in the gas plant of the field's floating production and storage vessel.
Libya's oil production rose to 1.74 million b/d following the completion of planned field maintenance at the Total-operated al-Jurf field.
Iraqi oil ministry figures not publicly available put wellhead output at 2.4 million b/d in October. With exports at 1.694 million b/d and internal consumption at 546,000 b/d, this leaves a considerable volume of "unaccounted for" oil. The overall figure obtained from the survey is closer to 2.3 million b/d.