With the possibility that demand for Iranian oil may fall below 1 million barrels a day (mbd) as sanctions continue to bite, Iran has announced that it wants OPEC to cut back production to the agreed quotas, rather than the overall additional 1 mbd that is actually being produced, and sold. Such a move would, of course, ,make it more difficult for those customers who have found a way of replacing Iranian oil, and perhaps incline them more towards disregarding the embargo.
OPEC has just released their December Monthly Oil Market Report(MOMR) in which they anticipate that earlier projections for 2013 oil demand growth will still be valid, at 0.8 mbd. (Though they note that December 2012 growth y-o-y was at 1.0 mbd as the US economy continued to improve). They expect that all of this increase will be met by non-OPEC increases in supply, and that demand for OPEC oil may even drop 0.4 mbd. Part of that projection continues to rely on increased US crude production, and the EIA TWIP of December 5th had the latest chart showing that projected growth, based on the newly released Annual Energy Outlook 2013.
Figure 1. Projections of future growth in US crude oil production. (EIA TWIP) from Annual Energy Outlook 2013
As a footnote to that graph the Alyeska pipeline pumped an average of 582,755 bd in November, which brings the annual average up to 544, 625 bd.
Coming back to the MOMR their projections do not include the recent news that Venezuelan President Chavez has had to have a fourth operation for cancer, and has named a successor, although the operation was apparently successful. This may complicate the decisions on how much to allocate among the OPEC partners, especially since all continue to need higher priced oil.
OPEC also give the price of various commodities in their report, and before going on to discuss country production, those prices are informative.
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Figure 2. OPEC report of commodity prices for November (OPEC December MOMR)
Equally informative is the demand that OPEC anticipates from the various regions of the world for oil in 2013.
Figure 3. OPEC estimates for regional oil demand in 2013. (OPEC December MOMR)
In total OPEC anticipates that global demand will reach 90.83 mbd by the fourth quarter of 2013.
Looking at where this oil might come from, the main increase is still anticipated to come from North America.
Figure 4. Non-OPEC supply projections for 2013 (OPEC December MOMR)
The conflict in Syria is now reported to have led government forces to withdraw from the Omar and Al-Ward fields in the Deir Ezzor region, where much of Syria’s exports were produced. However the rebels do not, as yet control any of the refineries or export terminals and the result is that oil production is estimated to have fallen from 380 kbd to 160 kbd over the past few months. The regime is making up the shortfall in its needs by importing from Iraq.
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Which brings us back to OPEC production levels. (Note that this is for crude oil and does not include the roughly 6 mbd in NGL that are currently being produced).
Firstly, this is what the various governments are reporting that they are producing:
Figure 5. OPEC production from official sources (OPEC December MOMR)
The total shows, among other things, how Libyan has recovered from their “Arab Spring.” In contrast with the official figures OPEC also posts the values from “secondary sources”.
Figure 6. OPEC production from secondary sources. (OPEC December MOMR)
The difference between the two figures for Iran is at around 1 mbd. Overall OPEC production is declining with the increase in non-OPEC production, so perhaps Iran won’t have quite as difficult a time persuading their colleagues to drop production a little more, to help them out. We will see.
By. Dave Summers