In OPEC, every oil output number tells a story

OPEC has, for years, insisted that it is an economic organization and not a political one. But few observers would disagree with the suggestion that pretty much everything in OPEC is political. We have seen how politics has complicated the appointments of secretaries general, most recently in the case of Abdalla el-Badri who, despite having ended his second and final three-year term as the organization’s secretary general in December last year, remains in the post.

Perhaps the area most overshadowed by politics is that of recording the production of member countries, which is why OPEC uses secondary sources to monitor its crude output.

The latest monthly oil market report, published earlier this week by the Vienna secretariat, estimates June crude output at 30.379 million b/d, which represents a drop of 309,000 b/d from 30.668 million b/d in May.

But OPEC also publishes a table – sometimes complete, sometimes not — of figures submitted directly by member countries. The two sets of figures can differ very widely indeed.

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The direct submissions for June do not include a figure from Angola, but if Angola were to repeat the 1.73 million b/d figure it supplied for May, the June total would be around 32.12 million b/d – some 1.74 million b/d more than the secondary source total.

For May, the direct submissions totaled 32.221 million b/d, 1.53 million b/d more than the secondary source total.

A comparison between the two tables shows that the direct submissions exceeded the secondary source estimates by just 154,000 b/d in 2011. In 2012, the direct submissions exceeded the secondary source estimates by 1.3 million b/d. By the first quarter of this year, the disparity had widened to more than 1.4 million b/d.

The widest difference is between the figures submitted directly by Iran and the estimates derived from secondary sources.

The figures provided by Tehran show Iranian production rising from 3.58 million b/d in 2011 to 3.74 million b/d in 2012 and remaining above the 3.7 million b/d level despite draconian US and European Union sanctions directly targeting the country’s oil revenues.

The secondary source estimates, on the other hand, show Iranian output falling from 3.63 million b/d in 2011 to 2.97 million b/d in 2012 and continuing to fall to 2.71 million b/d in the second quarter of this year.

But the direct submissions may have less to do with the near term than with any future distribution of output quotas. Which is why it seems unlikely that OPEC will open the Pandora’s box that is the quota system any time soon.

The group has been quota-less for two years, since the acrimonious and inconclusive June 2011 meeting that was described by Saudi Arabian oil minister Ali Naimi as the “worst ever.” When the group met again in December that year, it set an overall ceiling of 30 million b/d but did not assign individual country quotas.

Production has been adjusted informally, some countries increasing output alongside involuntary reductions from others. The fact that prices have remained steadily above the $100/barrel level without any kind of formal action makes it likely that, even if the December meeting results in a change in the overall ceiling, OPEC will leave quotas in their box.

 Table: OPEC output in June (in million b/d)
 Country
Secondary Sources
 Direct Submissions
 Algeria
1.163
1.207
 Angola
1.708
-
 Ecuador
0.505
0.524
 Iran
2.669
3.708
 Iraq
3.060
2.994
 Kuwait
2.835
2.980
 Libya
1.200
1.286
 Nigeria
1.861
1.716
 Qatar
0.736
0.721
 Saudi Arabia
9.575
9.642
 UAE
2.741
2.836
 Venezuela
2.326
2.774
 Total
30.379
-

 


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Comments

  1. Mad at July 13, 2013 5:25 am

    The residuary sources other than OPEC won’t be able to abate what’s coming. Somewhere around in 2011, perhaps, it’s been already worked out that it has to reach to $500 per barrel. If not, then at the very least, some concrete plausibility towards this goal must be demonstrated. And indeed, the time has come.

     

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