OPEC Production Jumps in February
The 12-member Organization of the Petroleum Exporting Countries' (OPEC) crude oil production output jumped to an average 29.8 million barrels per day (b/d) in February, as Saudi Arabia continued to boost production, according to a just-released Platts survey of OPEC and oil industry officials and analysts. This is up 230,000 b/d from an estimated 29.57 million b/d in January.
The increase more than offset the drop in Libyan supplies, estimated to have averaged 190,000 b/d over the month, as the deepening conflict hit the North African country's oil production and exports in the final week of February.
Excluding Iraq, which does not participate in OPEC output agreements, the 11 members bound by quotas (OPEC-11) pumped an average 27.1 million b/d in February, 190,000 b/d more than January's 26.91 million b/d, the survey showed.
Libyan output is estimated to have dropped to around 1.39 million b/d from January's 1.58 million b/d following the withdrawal of foreign oil company staff and consequent production shut-ins. The International Energy Agency last Friday estimated that the volume of shut-in production had now reached 1 million b/d.
“The key questions now center on how much more production loss we’ll see from Libya for March -- likely to be at least one million barrels per day, if not more -- and OPEC’s response to that,” said John Kingston, Platts global director of news. “All signs point to there being a one-for-one substitution so far in terms of barrels, but even so, that doesn’t take into account the market impact from a reduction in the quality of those substituted barrels, as well as a fear premium.”
Saudi Arabiaboosted production by 300,000 b/d to 8.7 million b/d, nearly 700,000 b/d more than its assumed OPEC quota.
Saudi oil minister Ali Naimi told the official Saudi Press Agency on Tuesday that the kingdom had met all incremental demand from its customers and was storing additional quantities of crude at various locations to meet any further call on its production.
Naimi said the kingdom currently had 3.5 million b/d of spare crude production capacity readily available that could help offset any supply shortfall. His remarks suggest that Saudi Arabia, which says it has total production capacity of 12.5 million b/d, has now boosted production to around 9 million b/d.
Platts reported Tuesday that Saudi Arabia had started to shift barrels of mainly lighter grades from its eastern ports to the Red Sea to position itself for additional shipments into Europe, where most Libyan crude is sold.
Other increases came from the United Arab Emirates (UAE), Iraq, Iran, Kuwait and Ecuador, while Angolan and Nigerian production dipped by 10,000 b/d and 20,000 b/d respectively.
The survey showed that the OPEC-11 exceeded their notional 24.845 million b/d output target by 2.255 million b/d, reducing their level of compliance with the 4.2 million b/d of output cuts agreed in late 2008 to 46.3% from 50.8%.
Iraq's 40,000-barrels-per-day increase took its production to 2.7 million b/d in February, a new post-2003 high.
OPEC production has been on the increase in recent months alongside rising oil prices, which early this year climbed above $100 per barrel (/b) for the first time in two years and continued to climb as political unrest spread across North Africa and the Middle East.
On February 24, North Sea Brent hit a 30-month high of $119.79/b, but prices have since fallen back to around $114/b for Brent and $105/b for U.S. light crude futures.
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