OPEC 10 exceeds current production quota by 1.5 million bpd
The Organization of the Petroleum Exporting Countries (OPEC)'s eleven members, including Iraq, pumped an average 27.93 million barrels per day (bpd) of crude in February, down 170,000 bpd from January's 28.1 million bpd, a Platts survey showed.
Excluding Iraq, which does not participate in OPEC output accords, the ten members with output quotas produced an average 26.03 million bpd, down 120,000 bpd from January's 26.15 million bpd. But despite the downward drift in output, the OPEC-10 were still more than 1.5 million bpd above their current 24.5 million bpd ceiling and more than 2.5 million bpd above the 23.5 million bpd ceiling which is scheduled to come into effect at the beginning of April.
The cartel decided at a February 10 meeting in Algiers to cut quotas by one million bpd from April 1. But with world crude benchmarks close to levels seen ahead of the US-led war on Iraq, there is little expectation that OPEC will reduce actual output over the next few weeks to anywhere near the new official ceiling, despite the group's apparent determination to implement the cut at least nominally.
"There had been some speculation that given high prices, OPEC members might not actually implement the cuts in April, giving some relief to consumers," said global director of oil at Platts, John Kingston. "But the Saudis have signaled clearly that they will cut five to six percent, on average, as of April 1, so we can expect to see these latest numbers down further in the next two months."
"Another factor OPEC will be looking at closely will be the return of some exports of Iraqi crude from the Turkish port of Ceyhan and the return of export operations at Khor Al-Amaya," Kingston said.
OPEC's own crude basket stood at $31.67 per barrel on March 10, its 67th straight trading day above the cartel's $22 to 28 target band. A senior OPEC delegate reiterated the cartel's determination to go ahead with the April 1 cut, citing members' concern to avoid a larger than normal stock build in the second quarter, but at the same time insisting that if circumstances changed -- either because of higher demand or disruption to supply -- OPEC would ensure the market was provided for.
Saudi Arabia, meanwhile, was one of six OPEC members to reduce output from January levels, the survey showed, but its 8.45 million bpd February average left it nearly 500,000 bpd above its current 7.963 million bpd quota. Furthermore, the Kingdom's volume allocations for April, reported by customers March 8 and March 9, suggested that OPEC's top producer was not planning to cut output to anywhere near its new April 1 quota of 7.638 million bpd, analysts said. In order to meet its new quota, Riyadh would need to slash output by more than 800,000 bpd.
Output decreases totaling 220,000 bpd were partially offset by 50,000 bpd in combined increases from Iran, Libya and Nigeria. Only Venezuela and Indonesia produced within quota, with Venezuela under-producing its 2.819 million bpd quota by close to 280,000 bpd. — (menareport.com)
© 2004 Mena Report (www.menareport.com)