The Organization of Petroleum Exporting Countries (OPEC) output of crude oil decreased to 26.91 million barrels per day (bpd) in November, marginally down from October's 26.93 million bpd, according to a Platts survey of OPEC and oil industry officials.
Cheating among the ten OPEC members bound by output quotas rose by 30,000 bpd to 2.81 million bpd in November. The survey showed that these ten countries produced 24.51 million bpd over the month against a ceiling of 21.7 million bpd, up from October's 24.48 million bpd. Iraq, whose crude exports are controlled by the United Nations (UN), does not participate in OPEC output accords.
"The level of overproduction is less important, for now, than the fact that the market clearly needs this oil. Prices have fallen from their highs, but they have hardly plunged," said Global Director of Oil for Platts, John Kingston.
"The discrepancy between actual production levels and official quotas, however, does set up the potential for significant conflict within OPEC should prices retreat and production need to be cut," Kingston added.
With the level of cheating having risen steadily through the year, and with prices holding around the mid-point of OPEC's $22-28 per barrel targeted price band, there is talk within OPEC of raising official quotas at next week's December 12, 2002 ministerial conference.
According to Platts' sources, this move would legitimize part of the overproduction and provide a more realistic level from which to cut output next spring, assuming demand for oil drops as expected after the winter. OPEC delegates say such an outcome is possible, but insist that it is not guaranteed.
Of the ten OPEC members bound by quotas, only Indonesia produced within quota. Iran, Iraq, Kuwait, Libya and the United Arab Emirates (UAE) all reduced production by a combined 200,000 bpd. Saudi Arabia and Nigeria overproduced by 150,000 bpd and 30,000 bpd respectively. Iraqi volumes fell in November, characterized by large swings in weekly export volumes reported by the UN.
Platts is the energy information, research, consulting, and marketing services unit of The McGraw-Hill Companies. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
