OPEC’s Monthly Oil Market Report was released this morning and it showed that total crude oil production from OPEC member nations rose to 32.96 million barrels/day in April. That’s a rise of 631,000 barrels/day in March. The May total is not yet available because data from Nigeria is missing.
Saudi Arabian production totaled 9.8 million barrels/day in May, down 300,000 barrels/day from April’s total. Iranian production was essentially flat at 3.7 million barrels/day, and Iraqi production was down slightly to 2.92 million barrels/day.
All these numbers are directly reported by OPEC’s members, and they don’t match up very well with what the cartel calls ‘secondary sources.’ These unidentified secondary sources put OPEC’s April production at 31.64 million barrels/day, more than 1.3 million barrels/day lower than the cartel’s own figure. The same sources put May production slightly lower, at 31.58 million barrels/day.
OPEC is meeting later this week, and Iran is expected to attempt to get the cartel to produce less in an effort to push the price higher. The cartel’s official production target is 30 million barrels/day, but in the fourth quarter of 2011 and the first quarter of 2012 daily production exceeded 31 million barrels/day.
The Saudis claim to want a price around $100/barrel, which they believe provides sufficient revenue and does not threaten the global economic recovery. The price for the OPEC reference basket of crude varieties averaged $108/barrel in May, down about $10/barrel from April’s price. But the average price for the first 5 months of 2012 is more than $115/barrel, about $9.50/barrel more than a year ago.
The disagreement between the Saudis and the Iranians over production levels is in large part a surrogate for the disagreement over which country is pre-eminent in the Middle East. Saudi Arabia, by virtue of its massive crude production level, continues to call the shots for OPEC. Besides, official production quotas have never mattered much to OPEC member nations and there’s no reason to believe that will change this week, or indeed, any time soon.
Paul Ausick
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