OPEC output surges in May as Iraq and Venezuela open taps

Published June 13th, 2002 - 02:00 GMT

The overall output of the Organization of the Petroleum Exporting Countries (OPEC) surged by 800,000 barrels per day (b/d) to 24.92 million b/d in May as Iraq resumed exports after a one-month suspension and Venezuela apparently obeyed a government order to turn up the pumps, a Platts survey of OPEC and oil industry officials indicated. 

 

Excluding Iraq, whose exports are controlled by the UN, the ten members with quotas pumped an average 23.13 million b/d over the month, an increase of 220,000 b/d over April's 22.91-million b/d which left them 1.43 million b/d in excess of their self-imposed 21.7 million b/d production ceiling.  

 

All ten members with quotas overproduced them. Seven countries increased production month-on-month by a combined 870,000 b/d. This volume was partly offset by 70,000 b/d in output decreases by three countries.  

 

Iraq accounted for the biggest single increase—580,000 b/d. Iraq turned off the taps in early April to protest Israeli incursions into Palestinian areas and turned them back on in early May. But Baghdad, with May output estimated at 1.79 million b/d, has not managed to restore its volumes anywhere near levels of 2.5-2.51 million b/d seen in February and March this year.  

 

Traders say Iraq has cut its illegal surcharge on crude exports to 15 cents per barrel (cts/bbl) for all destinations from 25 cts/bbl for Europe and Asia and 30 cts/bbl for the US in an attempt to boost liftings, effective from the beginning of June.  

 

Venezuela accounted for the second biggest volume boost in May, ramping up output to 2.68 million b/d from 2.48 million b/d in April when a strike crippled exports, the survey showed. Sources said in May that the energy ministry had ordered state oil company Petroleos de Venezuela temporarily to raise output above the country's OPEC quota to alleviate the government's serious cash flow problems. This was denied by oil minister Alvaro Silva.  

 

"There seems little prospect of any supply squeezes in the coming months, given the return of Iraq and the need for Venezuela to increase output," commented John Kingston, Platts' global director of oil. "However, there will be broader concerns if OPEC does not significantly increase output at its September meeting, in order to replenish inventories and prepare for the winter months' increased demand."  

 

OPEC's overall production in May of 24.92 million b/d is the highest level since March, when the group pumped an average 25.45 million b/d. But the 23.13 million b/d pumped by the ten members with quotas is the highest volume since the 21.7 million b/d production ceiling came into effect at the beginning of January.  

 

OPEC ministers have sent strong signals that they do not intend to adjust quotas when they meet June 26 in Vienna, although the cartel's outgoing Secretary General Ali Rodriguez suggested in an interview with Platts last week that a production increase could be possible in the fourth quarter. — (menareport.com) 

© 2002 Mena Report (www.menareport.com)


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