Platts: OPEC Boosts Oil Output in May
The Organization of the Exporting Countries (OPEC) pushed out an additional 200,000 barrels per day (b/d) of crude oil in May, boosting output to 29.04 million b/d from 28.84 million b/d in April, showed a just-released Platts survey of OPEC and oil industry officials and analysts.
OPEC kingpin Saudi Arabia, which vowed after OPEC's June 8 meeting in Vienna to ensure that world oil markets would not suffer any supply shortage, accounted for most of the additional barrels.
"You can see that the task ahead of Saudi Arabia, and any other nation determined to meet what is expected to be steadily increasing demand, is substantial," said John Kingston, Platts global director of news. A difference of opinion in what the market needs was the topic of unresolved debate at last week's OPEC meeting, which Saudi Oil Minister Naimi called the "worst ever," and which ended with the parley breaking up and taking no action.
"OPEC produced 29.8 million b/d before the Libyan uprising and it's only climbed back above 29 million b/d with the increases of the past month," Kingston added. "Most supply/demand estimates see an absolute minimum need for output of 30 million b/d in the second half of the year. It's a large jump, and all eyes will be on Saudi Arabia to see if it can get the job done."
Excluding Iraq, which does not participate in OPEC output agreements, the 11 members bound by quotas (OPEC-11) increased output by 160,000 b/d to 26.34 million b/d in May from 26.18 million b/d in April, the survey showed. This left OPEC-11 overproducing their notional 24.845-million-b/d target by 1.5 million b/d.
But that target, in place since January 2009, is now redundant following the failure of OPEC's June 8 ministerial meeting in Vienna to reach an agreement on output.
Saudi Arabia and its fellow Gulf Arab producers wanted OPEC to increase estimated April output of 28.8 million b/d by 1.5 million b/d to 30.3 million b/d, in line with the OPEC secretariat's projections of higher demand for OPEC crude in the second half of this year. Algeria, Angola, Ecuador, Iran, Libya and Venezuela opposed an increase.
As the Vienna talks broke up, Saudi oil minister Ali Naimi told reporters it and its Gulf neighbors intended to meet the expected higher demand.
"Saudi Arabia and the other three GCC countries are able and willing to supply whatever the market needs," he said, referring to Kuwait, the United Arab Emirates and Qatar which, with Saudi Arabia are members of the Gulf Cooperation Council, or GCC.
"The market is not going to see any shortage because we could not reach agreement at this meeting. We are willing and we are able and we will deliver what is needed," Naimi said.
Saudi Arabia, which had been producing well above its notional OPEC quota of just over 8 million b/d for some time, increased output by some 200,000 b/d in May, to 9.05 million b/d from 8.85 million b/d in April.
Other increases came from Nigeria, Qatar and Venezuela, while volumes dipped in Algeria, Angola, Iran, Libya and the UAE. Libyan crude production had been running close to 1.6 million b/d before the rebellion against the regime of Moammar Qadhafi, now in its fifth month, but dropped to an average of around 160,000 b/d in May from 200,000 b/d in April.
Saudi-owned newspaper al-Hayat reported, according to senior OPEC sources, June 10 that the country planned to raise oil production to 10 million b/d in July and to maintain that level for a month before reducing output in August in line with an expected dip in demand.
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