The Organization of the Petroleum Exporting Countries (OPEC)’ 11 members, including Iraq, pumped an average 27.75 million barrels of crude per day (bpd) in December, an increase of 230,000 bpd from November's 27.52 million bpd, according to a Platts survey .
Excluding Iraq, whose production rose by only 10,000 bpd over the month, output from the ten members with quotas rose by a combined 220,000 bpd to 25.85 million bpd, some 1.35 million bpd more than the 24.5 million bpd ceiling which came into effect in November, the survey showed.
"Never mind that OPEC was supposed to cut production," said global director of oil at Platts, John Kingston. "Demand is strong, prices are high, and Iraqi production is hardly gushing back into the market, which is what OPEC has feared. OPEC may be overproducing its quota, but it isn't overproducing demand, and that's what matters."
Just four countries -- Indonesia, Libya, Qatar and Venezuela -- reduced production in December. But their combined cuts totaled only 60,000 bpd, a volume dwarfed by the 290,000 bpd of increases from five countries -- Iran, Iraq, Nigeria, Saudi Arabia and the United Arab Emirates (UAE).
The biggest single increase came from Saudi Arabia, which boosted output by 140,000 bpd to 8.45 million bpd. Iran increased output by 40,000 bpd and Nigeria and the UAE by 50,000 bpd each.
Iraqi output rose by 10,000 bpd to average 1.9 million bpd in December, the survey showed. Iraqi oil ministry adviser Thamer Ghadban told Platts that production was currently running at 2.3 million bpd and rising. In a report to the US Congress last week, the White House said Iraqi production was expected to reach 2.5 million bpd -- the level of its pre-war production as estimated by Platts -- in April.
Although OPEC's crude basket has spent 25 straight trading days above the $22-28 per barrel of oil target band, OPEC has opted not to exercise its option under OPEC rules to increase production. The so-called price band mechanism allows OPEC to release an additional 500,000 bpd of crude if the basket stays above the target price band for 20 consecutive trading days.
"What has been interesting about OPEC's recent behavior is that it seems to have tacitly moved its projected price band up to about $25-$30 from $22-$28," Kingston said. "Prices have been high enough over $28 for the OPEC basket that it was supposed to trigger increased production by the group, but it did not. That is an indication that the organization possibly sees the 'natural' level of prices as having taken a step higher." — (menareport.com)
© 2004 Mena Report (www.menareport.com)
