Tag Archives: Opec

Saudis to pump 10 million bpd

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The Saudis don’t sell in the spot markets, they only post prices to refiners and then take orders at those prices.

That is, they post price and let quantity vary.

So the only way they could definitively get to 10 million bpd would be to change policy and sell in the spot market, which would let loose a downward price spiral until some other producer decided to cut production to stop the fall.

As always, it’s their political decision, and no telling what they might actually do.

Saudi Shows Who’s Boss, to Pump 10 Million Barrels Per Day

June 10 (Reuters) — Saudi Arabia will raise output to 10 million barrels day in July, Saudi newspaper al-Hayat reported on Friday, as Riyadh goes it alone in unilaterally pumping more outside OPEC policy.

Citing OPEC and industry officials, the newspaper said output would rise from 8.8 million bpd in May. There was no immediate independent verification of the story.

The report suggests Riyadh is asserting its authority over fellow members of the Organization of the Petroleum Exporting Countries after it failed to convince the 12-member cartel to lift output at an acrimonious meeting in Vienna on Wednesday.

“The Saudi intention is to show that they cannot be pushed around,” said Middle East energy analyst Sam Ciszuk at IHS. “Either OPEC follows the Saudi lead or they will have problems.”

A proposal by Saudi and its Gulf Arab allies the UAE and Kuwait to lift OPEC production was blocked by seven producers including Iran, Venezuela and Algeria.

The two sides blamed each other for the breakdown in talks. Saudi Oil Minister Ali ali-Naimi called those opposed to the deal obstinate. Iran’s OPEC governor Mohammad Ali Khatibi responded by saying Riyadh had been overly-influenced by U.S.-led consumer country demands for cheaper fuel.

“The hawks in OPEC called their bluff and now it is up to Riyadh to show that they were not bluffing — that they will go ahead unilaterally if pushed,” said Cizsuk.

Saudi Arabia has not pumped 10 million bpd for at least a decade, according to Reuters data, production having peaked at 9.7 million bpd in July 2008 after prices hit a record $147 a barrel. It is the only oil producer inside or outside OPEC with any significant spare capacity.

Asked in Vienna on Thursday whether Saudi would reach 10 million bpd Naimi said: “Just send the customers, don’t worry about the volumes.”

Gulf delegates said Riyadh was planning to pump an average 9.5-9.7 million bpd in June.

Saudi is already offering more crude to refiners in Asia, which, led by China, is driving a global rise in oil consumption.

Forecasts from OPEC headquarters show demand will increase about 1.7 million bpd in the second half of the year from recent cartel output of about 29 million bpd.

Brent crude rose to a 5-week high of $120 a barrel after the OPEC talks broke down. Prices eased after Friday’s Saudi news, last dipping 63 cents to trade near $118.94 a barrel.

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OPEC indecision of no consequence

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It doesn’t matter what OPEC decides with regard to increases.
The only ones with excess capacity, for all practical purposes, are Saudis.
The others have always pumped all they could and let the Saudis be the swing producer.

Historically, the hard part has been to get anyone other than the Saudis to cut production when the Saudis needed help to keep a floor under prices. Invariably the others would cheat and produce to capacity, letting the Saudis carry the burden of reduced sales.

In any case, the Saudis will continue to post their prices to their refiners and fill any and all orders at those posted prices.
And the rest of OPEC will likely keep producing at near max levels.

And most expect Lybia to be back on line in a few weeks or so, in which case Saudi production will ‘automatically’ fall back.

OPEC Talks Break Down, No Deal to Lift Oil Supply

June 8 (Reuters) — OPEC talks broke down on Wednesday without an agreement to raise output after Saudi Arabia failed to convince the cartel to lift production.

Secretary General Abdullah El-Badri said the effective decision was no change in policy and that OPEC hoped to meet again in three months time. No date has been set for another meeting.

“Unfortunately we are unable to reach a consensus to reduce or raise production,” El-Badri told reporters.

Gulf Arab delegates said Iran, Venezuela and Algeria refused to consider an output increase. Non Gulf delegates said Saudi Arabia had proposed an increase on top of April supplies that was too high for them to contemplate.

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Saudi’s oil production down 900k bpd

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Right, this is the second time they’ve said this.

It could all simply be ‘cover’ for lowering prices.

Lots of reasons why they might lower price:

Get it way down and ‘intimidate’ investors in alternatives.

Try to spur demand.

Try to support the world economy and their support their equity holdings.

Members of the royal family and/or other insiders may have established large personal shorts in fwd crude contracts, and now lower price to transfer wealth to their own personal accounts.

Supports any other scheme they may have dreamed up on their flights back and forth to London.

It’s good to be price setter.

Saudi oil minister says market oversupplied and cuts output

By Amena Bakr and Reem Shamseddine

April 17 (Reuters) — Saudi Arabia’s oil minister said on Sunday the market was oversupplied and the kingdom had reduced output, sending a the strongest signal yet that OPEC may not boost output in June to quell soaring oil prices.

Consumers have urged the exporters’ group to add supply to halt the rally in oil prices that has taken crude to its highest level in 2 1/2 years amid unrest in North Africa and the Middle East, but OPEC members say there is little they can do to bring prices down.

“The market is overbalanced … Our production in February was 9.125 million barrels per day (bpd), in March it was 8.292 million bpd. In April we don’t know yet, probably a little higher than March. The reason I gave you these numbers is to show you that the market is oversupplied,” Naimi told reporters.

Two Saudi-based industry sources told Reuters last week the kingdom had cut production.

Naimi’s words, echoed later on Sunday by his counterpart from the United Arab Emirates, are the clearest indications yet that the group is unconvinced there is a need for more oil despite the civil war that has slashed Libyan output and expectations Japanese oil demand will rise as it scrambles to rebuild its earthquake-shattered electricity grid.

“These statements underscore the breadth of the security premium currently in (oil) prices. Overall supplies are sufficient,” said John Kilduff of energy hedge fund Again Capital. “As we’ve seen in the past, however, a well-supplied market is not always a barrier to very high prices.”

NO COMMENT ON PRICE FROM NAIMI

Naimi declined to comment on the current price of crude.
Oil prices fell early last week after Goldman Sachs warned high prices may be eroding demand, but rebounded on signs of renewed health in the U.S. economy on Friday.

Nobuo Tanaka, the head of the International Energy Agency, which represents oil importers’ interests that warned last week high prices were cutting into oil demand, stopped short of saying OPEC needed to boost output, but suggested the group be more flexible in its thinking about supply.

“The market is getting tighter and if it is tighter the price may go up, which may have a negative impact to economic growth,” Tanaka told reporters.

Unrest in North Africa and the Middle East has left Saudi Arabia and other Gulf nations nervous of political unrest. The kingdom has promised nearly $93 billion in handouts to its citizens to keep them happy, making a sharp fall in oil prices a major risk for its budget.

Saudi Arabia and some other OPEC members unilaterally boosted oil production after the March uprising against Libyan leader Muammar Gaddafi shut down the bulk of the North African OPEC member’s oil industry but weak demand for the additional production appears to have prompted the reduction in output.

Naimi said Saudi Arabia had sold 2 million barrels of a special blend of crude that tried to replicate the high quality Libyan barrels lost. Demand for the blend has been tepid, according to oil traders.

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OPEC February Crude Output Down 770,000 Bbl/Day to 27.775 Million

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The Saudis are back to being swing producer as they set price and let output adjust.

World inventories are estimated to be falling by over 1.4 million barrels per day, as confirmed by the contango quickly fading to backwardation as we pass the ‘roll period’ for the passive funds.

With demand holding up better than markets anticipated and world non OPEC supply stagnant as well, I would expect demand for Saudi output to rise even as they keep prices firm.

I also expect the Fed to see this as a threat to growth rather than inflationary, and therefore continue to keep rates low.

OPEC February Crude Output down 770,000 Bdl/Day to 27.775 Mln

Mar 5 (Bloomberg) — Crude-oil production from the 12 OPEC members in February declined 770,000 barrels a day from January, the latest Bloomberg survey of producers, oil companies and industry analysts shows. Figures are in the thousands of barrels a day.

Opec Production
February 2009

Opec Country Feb Est. Jan Monthly Output Feb. 1 Change Est. vs. Target* Est. Target Est. Cap. (@)
Algeria 1,245 1,275 –30 1,203 42 1,450
Angola 1,670 1,740 -70 1,517 153 2,000
Ecuador 445 475 -30 434 11 500
Iran 3,690 3,780r -90 3,336 354 4,100
Iraq* 2,385 2,365 20 – – 2,500
Kuwait# 2,140 2,280 -140 2,222 -82 2,650
Libya 1,605 1,630r -25 1,469 136 1,800
Nigeria 1,765 1,810 -45 1,673 92 2,500
Qatar 695 725 -30 731 -36 900
Saudi Arabia# 7,860 8,025 -165 8,051 -191 10,800
U.A.E 2,210 2,290 -80 2,223 79 2,800
Venezuela 2,065 2,150 -85 1,986 79 2,500
Total OPEC-12 27,775 28,545r -770 — — 34,500
Total OPEC-11* 25,390 26,180r -790 24,845 545 32,000

*Quotas effective Jan. 1, 2009. OPEC agreed at its Dec. 17 meeting in Algeria to cut its quota target by 2.463 million barrels a day from the previous level, to 24.845 million barrels daily from Jan. 1. The quota target excludes Iraq, which has no formal quota. Indonesia left OPEC at end-2008.

Totals rounded.

r = revised @ = Capacity attainable within 30 days and sustainable for 90 days. # Includes Neutral Zone production shared equally between Saudi Arabia & Kuwait.


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Crude oil prices

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I believe the Saudi guy:

Qatar energy official: OPEC willing to cut output

by Adam Schreck

Feb 15 (AP) — A senior Qatari energy official said Sunday that OPEC is watching the oil market closely and stands ready to cut output further when it meets next month.

Mohammed Saleh al-Sada, Qatar’s minister of state for energy and industry affairs, told reporters on the sidelines of a conference in Doha that the Organization of Petroleum Exporting Countries “will respond appropriately” to the rapid drop in oil prices.

“If there is a need, actually, to go down, they will not be hesitant to reduce it further,” he said, without saying by how much.

The oil-producing group, he said, was facing difficulties in setting output because of the “unusual situation” of extreme fluctuation in prices. “The volatility is huge,” said al-Sada.

Al-Sada said a “reasonable price” for oil would be $70 a barrel -well above the $37.51 benchmark light, sweet crude settled Friday.

In Kuwait, however, a senior oil official said crude prices are unlikely to rise above $40 per barrel, even if OPEC decides to cut as much as 2 million barrels per day at its meeting next month.

Moussa Marafi, a member of the Supreme Petroleum Council, Kuwait’s highest oil policy-making body, told Annahar newspaper in comments published Sunday that oil prices are being pressured by surging U.S. crude inventories and a lack of compliance to quotas by some OPEC members.

The comments come a day after the oil minister of Venezuela, a traditional price hawk, said it would support new production cuts. Oil Minister Rafael Ramirez said the group is worried because commercial inventories are still «very high.

OPEC members have agreed to slash production by 4.2 million barrels from September levels in an effort to put a floor beneath prices that have tumbled by nearly three-quarters from the record highs they hit over the summer.

The group, which produces about 40 percent of the world’s oil, said last week it has completed about 80 percent of those previously agreed cutbacks.


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OPEC January Crude Output Down 1,050,000 Bbl/Day to 28.565 Mln

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OPEC January Crude Output Down 1,050,000 Bdl/Day to 28.565M

Feb 3 (Bloomberg) — Crude-oil production from the 12 OPEC members in January declined 1,050,000 barrels a day from December, the latest Bloomberg survey of producers, oil companies and industry analysts shows. Figures are in the thousands of barrels a day.

Opec Production
January 2009

Opec Country Jan Est. Dec. Monthly Output Jan. 1 Change Est. vs. Target* Est. Target Est. Cap. (@)
Algeria 1,275 1,330 -55 1,202 72 1,450
Angola 1,740 1,820 -80 1,517 223 2,000
Ecuador 475 500 -25 434 41 500
Indonesia* – – – – – –
Iran 3,800 3,850 -50 3,336 464 4,100
Iraq* 2,365 2,345 20 – – 2,500
Kuwait# 2,280 2,350r -70 2,222 58 2,650
Libya 1,630 1,660r -30 1,469 161 1,800
Nigeria 1,810 1,900 -90 1,673 137 2,500
Qatar 725 790 -65 731 -6 900
Saudi Arabia# 8,025 8,400 -375 8,051 -26 10,800
U.A.E 2,290 2,350 -60 2,223 67 2,800
Venezuela 2,150 2,320 -170 1,986 164 2,500
Total OPEC-12 28,565 29,615r -1050 — — 34,500
Total OPEC-11* 26,200 27,270r -1070 24,845 1,355 32,000

*Quotas effective Jan. 1, 2009. OPEC agreed at its Dec. 17 meeting in Algeria to cut its quota target by 2.463 million barrels a day from the previous level, to 24.845 million barrels daily from Jan. 1. The quota target excludes Iraq, which has no formal quota, and Indonesia which left OPEC at end-2008.

Totals rounded.
r = revised @ = Capacity attainable within 30 days and sustainable for 90 days.
# Includes Neutral Zone production shared equally between Saudi Arabia & Kuwait.


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Re: Obama’s challenge- OPEC, the Saudis, and the Russians

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(email exchange)

Yes, that’s the issue when there is more excess capacity than any one producer can afford to ‘allow.’

The excess production capacity (until recently) has been under 2 million barrels per day. This has allowed the Saudis to be ‘price setter’/swing producer as all other producers could produce flat out,
and the Saudis could set price and let their output fill the remaining demand of about 9 million bpd.

In July, however, Mike Masters triggered a massive inventory sell off as passive commodity players and specs hit bids to reduce positions, and the demand for physical inventories also fell as it seems many physical inventories probably had been held at relatively high levels in anticipation of higher prices.

This meant the Saudis could not control price without major and obvious production cuts- maybe $5 million bpd- to speed the inventory adjustment and retain their position as swing producer/price setter.

I looked at (guessed) the latest announced OPEC production cuts as a sign the Saudis thought the inventory liquidation was largely past and that they were again able to set price and let production adjust to the residual demand. With other OPEC members cutting output some, the Saudis could set price and expect the residual demand that determines their output would be that much higher.

Yes, demand is down in many regions, but so far no figures released on world demand for crude has indicated an outright decline in demand. Yes, some supply indicators are up some, but others are down. The balance is not clearly tipping to a large enough cut in net demand to dislodge the Saudis as price setter.

Note that West Texas crude is over $3 higher than Brent- a wider spread than the shipping charges might indicate. This implies a shortage of WTI. But at the same time the WTI futures markets are in contango, indicating comfortable inventory levels. Also, the gasoline crack has gone negative vs WTI, indicating perhaps it is being prices off of Brent which means the marginal supply is currently imported gasoline as domestic refiners continue to produce well below capacity.

Russia is the large non-OPEC exporter, and the recent meetings with the Saudis and the below commentary indicate some form of cooperation is in process.

What the oil exporters should be hoping for is a world wide move to restore aggregate demand without an immediate policy to reduce fuel consumption. That will enable the oil exporters to increase their real terms of trade via price hikes.

The darker side is that instead of looking to optimize their real terms of trade, their primary focus may be on keeping the western economies ‘weak’ to keep them focused inward and allow the Russians freedom to operate as they please in their regions of choice, and hasten the exit of the ‘infidel’ from Iraq and the rest of the middle east. In this case, price hikes will be used to keep the western economies weak and off balance, as they confront inflation, weakness, and deteriorating real terms of trade and standards of living, with real wealth moving towards the oil (and other energy) exporters.

On the other hand it is possible the oil exporters want to keep prices low enough to discourage moves away from petroleum, especially in the auto industry.

Point is, currently and for at least the next several years, the Saudis/Russians control price, and we can only guess to what end.

>   
>   On Tue, Nov 11, 2008 at 7:16 AM, wrote:
>   
>   One bit of news, brought to our attention by our friend, Mr. Elio Ohep, the
>   Editor/Publisher of the always interesting petroleumworld.com, is that of the
>   anger on the part of Russian Prime Minister Putin regarding the current price
>   for crude, and Russia’s apparent inability to do anything about it. Clearly
>   Putin & Company are upset by crude’s weakness, for much of the current
>   military build-up taking place there, and much of the infrastructure growth
>   taking place is predicated upon high priced crude oil. Speaking over the
>   weekend, Mr. Putin said that Russia must do what it can to influence oil
>   prices. He said, in an interview on Russian national television, that We need
>   to work out a whole range of measures that will allow us to actively influence
>   the market…As one of the major exporters and producers of oil and
>   petroleum products, Russia cannot stand aside from formulation of global
>   prices for this natural resource. There is little that Russian can do however
>   other than cut production and hope that others… especially OPEC…follows
>   suit. The problem that Russia, and Venezuela, and Mexico, and Ecuador, and
>   Indonesia, and Saudi Arabia and seemingly all of the oil producing
>   nations….especially Iran…. face is that they need the cash flow from crude
>   oil to keep buying the support of their restive populations. They’ve no choice,
>   and low prices make their jobs all the harder, for in hoping to keep their cash
>   flows high they need to pump more, not less, crude. Putin and Ahmadinejad
>   find themselves as uncomfortable brethren in economic arms, hoping that the
>   other will cut production.
>   


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Opec output

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Not much demand destruction showing up here. Saudis set price and let quantity adjust to world demand. Can take a few months to show up due to the ‘supply chain’ that can expand and contract.

OPEC’s Oil Output fell 0.2% in October, Survey Shows

New York, Nov. 3 (Bloomberg) — Crude-oil production from the 13 OPEC
members in October declined 70,000 barrels a day from September, the latest
Bloomberg survey of producers, oil companies and industry analysts shows.
Figures are in the thousands of barrels a day.

Opec Production
October 2008

Opec Country October Est. Sept. Monthly Output Nov. 1 Change Est. vs. Target Est. Target Est. Cap. (@)
Algeria 1,400 1,400 0 1,286 114 1,450
Angola 1,875 1,800 75 1,801 74 2,000r
Ecuador 500 500 0 493 7 500
Indonesia* 850 865 -15 a’ a’ 900
Iran 3,900 3,950 -50 3,618 282 4,100
Iraq* 2,235 2,165r 70 — — 2,500
Kuwait# 2,600 2,580r 20 2,399 201 2,650
Libya 1,750 1,720 30 1,623 127 1,800r
Nigeria 1,920 1,940r -20 2,050 -130 2,500r
Qatar 870 870r 0 785 85 900
Saudi Arabia# 9,350 9,450 -100 8,477 873 10,800
U.A.E 2,580 2,650 -70 2,433 147 2,800
Venezuela 2,350 2,360 -10 2,341 9 2,500
Total OPEC-13 32,180 32,250r -70 — — 35,400r
Total OPEC-11* 29,095 29,220r -125 27,308 1,787 32,000r

*Quotas effective Nov. 1, 2008. OPEC agreed at its Oct. 24 meeting to cut
its quota target by 1.5 million barrels a day, to 27.308 million barrels
daily from Nov. 1. The new target excludes Iraq, which has no formal quota,
and Indonesia who leaves OPEC at year-end.


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