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OPEC and world oil supplies

August 10, 2015

Over the past year I have found the oil market much more interesting than the gold market. From the simple aspect of the supply and demand metrics combined with other countries abilities to do what they want – or as some people argue, what the US tells them to do.

This is a good synopsis on what is happening with production around the world broken down by country. Overall we are seeing way more oil! But we already knew that…

Click here to visit the website that posted this article – EconBrowser.com.

There’s been a remarkable surge in world oil production over the last year. And the United States is only part of the story.

World oil production basically stagnated over most of the last decade. From January 2005 to April of last year, daily production of crude oil and condensate increased by less than half a million barrels annually. But over the last 12 months, the figure is up 3.1 mb/d.

World production of crude oil and lease condensate in millions of barrels per day, monthly Jan 1995 to Apr 2015.  Data source: EIA Monthly Energy Review, Table 11.1b.

The surge in U.S. shale production, dramatic as it has been, accounts for only a little over a third of that increase. I hope to say more about the prospects for U.S. production in a subsequent post. Canada also made a noticeable contribution to the world total; I discussed reasons why Canadian oil production would increase despite the falling price of West Texas Intermediate last March. But the really astonishing change over the last year has been OPEC production. OPEC production was virtually the same in April of last year as it had been at the beginning of 2005. But it is up 1.3 mb/d over the last 12 months.

Change in world crude oil field production, April 2014 to April 2015 in thousands of barrels per day, by source.  Data: EIA Monthly Energy Review, Tables 11.1a and 11.1b.

And the story of increased OPEC production is not, as many people seem to assume, that the Saudis have opened the floodgates in an effort to discipline North American competitors. Saudi production is not up much from where it stood a year ago. A much bigger story is Iraq, where the ambitious new projects that the country has been pursuing for some time are finally showing some impressive results. Iranian production is also up, and significant increases could lie ahead as sanctions are lifted. Libya is still a very unstable place, but slightly less so than in the spring of last year, and that is another reason why OPEC production today is higher than it was a year ago.

Change in OPEC crude oil production in thousands of barrels per day, April 2014 to April 2015.  Data: EIA Monthly Energy Review, Table 11.1a.
Here’s a longer-term perspective on what’s been happening in OPEC. The sanctions on Iran and turmoil in places like Libya and Iraq were important factors in the overall stagnation of OPEC production over the last decade. If Iraq, Iran and Libya can return to some kind of normalcy, we could soon see an additional million barrels/day increase from those three countries. And if the precarious status quo in other troubled areas such as Nigeria can be maintained, that would mean that the surge in OPEC production has only begun.

OPEC production of crude oil in millions of barrels per day, monthly Jan 2005 to Apr 2015.  Data source: EIA Monthly Energy Review, Table 11.1a.

It’s hard for me to believe reading the news that peace and stability are about to break out in the Middle East and North Africa. But for now, more oil seems to be flowing from those troubled regions, and further big increases could lie ahead.

Discussion
72 Comments
    Aug 10, 2015 10:22 PM

    My tenant told me that Saudi has doubled the drilling since January 2014 so his company made a lot of money. It was a carefully planned price manipulation, not an accident. The man works in Saudi Arabia. He is the eye witness. Every other information is secondary.

    CFS
    Aug 10, 2015 10:29 PM

    HSBC took physical delivery of 3.9 tonnes of gold.
    I don’t know when SeekingAlpha will tell you that.

    CFS
    Aug 10, 2015 10:33 PM

    It seems to me HSBC has always been more of a market manipulator than Goldman, but that’s just my personal opinion.

      Aug 10, 2015 10:44 PM

      HSBC even manipulates the perception about China. They publish Chinese PMI, GDP, confidence other reports. Most if not all the data which western media report are actually from HSBC instead of Chinese government. When the media reports, they remove the source and make it like it is Chinese government data. It is widely quoted in the West. They should be brought to justice. It is sickening.

        Aug 10, 2015 10:56 PM

        That’s news to me. Thanks for the tip Lawrence.

        Aug 10, 2015 10:05 PM

        BIG CON GAME………………

          Aug 11, 2015 11:31 AM

          TUES MORNING AND Hong Kong taking it to the SHORTS…………

      Aug 10, 2015 10:08 PM

      The Chinese made the first currency , they showed the Jewish bankers how to play the game in 1690-1700

    Aug 10, 2015 10:40 PM

    Saudi said last week that they will cut production at the end of the summer – I think the time is now, or around now, to get into oil resource stocks.

    I think everything else is just FUD.

    I could be wrong 🙂

      Aug 10, 2015 10:47 PM

      China is starting to deliver their new storage devices. It was reported that they have delivered the first one in June in Qing Dao port and many are coming. You will see Chinese purchase at historic highs from month to month.

      Aug 10, 2015 10:36 PM

      Another piece of information. I have a friend working as administrator in university. She said that the financial support for students from Saudi government is reduced. This caused difficulty for the student she in her department. It could mean that Saudi Arabian revenue has been affected to the degree that they have to make tough choices.

    CFS
    Aug 10, 2015 10:05 PM

    Marc Faber suggests oil company share prices may be depressed by sales of central bank holdings. (Of course he’s talking about major oil companies)

      Aug 10, 2015 10:52 PM

      Faber……seems to be lost on direction of gold………….

    Aug 10, 2015 10:09 PM

    I love the fact that know one is talking up the XL pipeline, I said it wasn’t needed and if implemented it would have been a disaster for The US, not Canada. Some of the areas it would have gone through like Nebraska are the food basket of the World. I am not an environmentalist but it would be a disaster waiting to happen. Now watch how Enbridge who purchased all that pipe for the XL pipeline tries to push some other route instead of owning up to their mistake. DT

      Aug 10, 2015 10:12 PM

      Not Enbridge but their parent company Trans Canada pipeline.

    CFS
    Aug 10, 2015 10:56 PM

    Meanwhile in Greece:
    The politicians think they’re d*mn Greek Gods, but they’re just God*mn Greeks.

    http://thedailybell.com/news-analysis/36466/The-European-Project-Takes-Another-Step/

    For the good of the Greek people, they need to default on the debts, and start over.

      Aug 10, 2015 10:08 PM

      CFS, I am not always in agreement with you but on this point in regards to Greece and their debts I am.

        CFS
        Aug 10, 2015 10:51 PM

        I’m not always right. But I try not to make mistakes.

        And I never try to mislead.

          Aug 11, 2015 11:48 AM

          You’re a good guy in my book CFS. I appreciate all the posts you put up every day, and don’t always comment on all of them but just wanted to say thanks.

      Aug 10, 2015 10:13 PM

      EVERYONE NEEDS TO DEFAULT ON THE DEBT…………..JUBILEE IS IN ORDER…….RESET

    CFS
    Aug 10, 2015 10:44 PM

    Hey, Hey, Hey:

    https://youtu.be/hdyqwVEvyfY

    Finally, someone gets it.

      Aug 11, 2015 11:28 AM

      Published in MAY……… Kyle is the new Hunt I am thinking……….physical delivery of $1billion……….there will be more………………..jmho

      Aug 11, 2015 11:47 AM

      GREAT INFO…………BTW…………….THANKS……………………THE CLAW

        Aug 11, 2015 11:50 AM

        BIG OWL……….might want to post this one…. as a HEADS UP article.

      Aug 11, 2015 11:44 AM

      I guess China is going back to the way they know more about. Hope it does not cause high inflation.

    CFS
    Aug 10, 2015 10:22 PM

    id a while ago some of the Chinese Naval Exercises looked like preparation for attacking Taiwan, well now:

    http://thediplomat.com/2015/08/satellite-imagery-from-china-suggests-mock-invasion-of-taiwan/

    When you have an incompetent US President it does not help keep the peace….

    Aug 10, 2015 10:22 PM

    BBC reporting is as the biggest devaluation for a decade. Two percent.

    CFS
    Aug 10, 2015 10:26 PM

    It appears I was wrong about Iran buying Chinese missiles, they’re buying fighter planes:
    http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20150809000116&cid=1101&MainCatID=0

    Of course, the Big Zero giving them hundred of billion of dollars in the Iran Treaty gives them lots of buying opportunities. This is just a beginning.

    CFS
    Aug 10, 2015 10:35 PM

    England’s Daily Mirror is the best selling working class newspaper.
    A little bit over-dramatic at times; but this is bizarre!

    http://www.mirror.co.uk/news/world-news/isis-unveils-chilling-new-map-6224227.

    Not to worry though the Big Zero is sending another dozen fighter planes, and a total of 300 support personnel to destroy ISIL or ISIS.

    CFS
    Aug 10, 2015 10:37 PM

    EPA says, oops, we underestimated our spill by a factor of at least 3.

    Just watch people get fired!

    Not!

    CFS
    Aug 10, 2015 10:41 PM

    Oops, I made a mistake. I over-estimated Obama’s effort to wipe out ISIL by a factor of 2.

    http://www.reuters.com/article/2015/08/09/us-mideast-crisis-incirlik-idUSKCN0QE0RV20150809?feedType=RSS&feedName=topNews

    He’s only sending 6 extra jet fighters.

    Aug 10, 2015 10:49 PM

    CFS you are missing the real story.

      CFS
      Aug 11, 2015 11:45 AM

      Which is?

    CFS
    Aug 10, 2015 10:04 PM

    Since the media are focused on Trump’s mistakes, as an equal opportunity offender, I thought I’d mention Hillary:

    http://narcosphere.narconews.com/notebook/bill-conroy/2015/07/emails-show-secretary-clinton-disobeyed-obama-policy-and-continued-fund

    CFS
    Aug 10, 2015 10:05 PM

    Just think how the Russians would be able to Blackmail a President Hillary with all the data they took off her hard-drive!

    CFS
    Aug 10, 2015 10:29 PM

    Is the US president a pro=Islamic traitor?

    New from Russia:
    http://www.rt.com/usa/312050-dia-flynn-islamic-state/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

    Not covered by US media!

      GH
      Aug 11, 2015 11:14 AM

      I’m far from an Obama fan, CFS, but I don’t understand why you’re always leveling this accusation at him.

      I try to keep things simple, and the simple reality to me is that Obama was the preferred candidate of the oligarchs who run the US. If Wall Street and the military industrial complex didn’t want him there, he wouldn’t be there. Maybe I’m a simple-ton.

      As far as ISIL/ISIS, I suspect the US is perfectly happy to have them there. They provide a pretext for the US and Turkey to keep attacking Assad. They split up the Iran-Iraq-Syria-Lebanon Shia crescent. They are armed with American weapons. They aren’t the first nasty fanatical islamic group ‘inadvertently’ empowered by the US.

      Hillary–the NSA could certainly blackmail her (as well as virtually any public figure, but she’s gotta be worse than most)!

        Aug 11, 2015 11:51 AM

        Bingo.

    CFS
    Aug 10, 2015 10:33 PM
    CFS
    Aug 10, 2015 10:35 PM
      GH
      Aug 11, 2015 11:19 AM

      I’m still waiting for credible evidence that Iran is a threat to the US, and that they should be denied the right that all countries have to develop nuclear energy resources.

      Noam Chomsky’s perpsective: https://www.youtube.com/watch?v=DjBDEcpfTZs

      Your constant beating of this drum reminds me exactly of the fear-mongering hysterics that led to the criminal debacle in Iraq in 2003. Where did you side on that one?

        CFS
        Aug 11, 2015 11:37 AM

        In his book Permanent Socialist, Professor Noam Chomski writes “I am a Marxist, a Trotskyist….”

        He is opposed to US foreign policy on almost all areas.

        If Iran was solely interested in Nuclear energy, why did the UN inspectors find traces of Uranium enrichment above 10%?

          Aug 11, 2015 11:54 AM

          Yet even Chomsky knows that Obama is worse than Bush and Blair.
          https://www.youtube.com/watch?v=8mA4HYTO790

          GH
          Aug 11, 2015 11:30 AM

          I certainly don’t agree with Chomsky on everything.

          But it’s the ideas expressed in this video clip that are important. Yours, as far as I can tell, are for pre-emptive war, which is to say never-ending war.

          You dodge my key question: Where did you side on Iraq? With Cheney and Rumsfeld and Powell? Or with those who were correct?

    CFS
    Aug 11, 2015 11:09 AM

    Gh,
    You probably also deny Iran is the biggest instigator of terrorist attacks, despite being so designated by the US.

      Aug 11, 2015 11:56 AM

      America holds that distinction.

        GH
        Aug 11, 2015 11:32 AM

        100% Matt.

        I dare you to debate this point CFS. Amazing.

    CFS
    Aug 11, 2015 11:12 AM

    No one is trying to deny them the right to develop Nuclear Energy.

    Aug 11, 2015 11:05 AM

    The Chinese are devaluing the Yuan by 1.9%. Some people were saying on this forum in the last few days there will be a big revaluation. Well…

      CFS
      Aug 11, 2015 11:40 AM

      The Russian Rouble and Brazilian Real were also devalued 2%

    Aug 11, 2015 11:15 AM

    Chomsky is anti corporate welfare fascism..

      Aug 11, 2015 11:30 AM

      Yes, but he’s still wrong about economics (if morality and individual freedom is our measure). Fascism, by the way, is a form of collectivism like socialism and communism. It is therefore part of the “left,” contrary to the mainstream propaganda.

        Aug 11, 2015 11:56 AM

        I have to add that Chomsky is also wrong on economics if what’s best for the largest number of people is our measure.
        As long as academics and intellectuals like Chomsky promote big almighty government and wealth redistribution as the answer to big almighty government and wealth redistribution that they’re critical of, they can have long successful careers.
        Today’s Republicans are also part of the left.

    Aug 11, 2015 11:33 AM

    Has anyone noticed that the gold dump a few weeks ago was essentially e billion dollars?
    https://en.wikipedia.org/wiki/E_(mathematical_constant)

    Aug 11, 2015 11:29 AM

    HSBC is corrupt as they come. Not sure why they are around…interest rate rigging on and on. But China has been skewing numbers for ever. Don’t blame HSBC. the kettle calling the pot black. China has pulled everything i. The book to stableize their stock market in cluding locking up people shares!!? The US markets look down right safe and honest and thats why they have done sooooo well. Where are you going to go to get a safe div?!
    As for oil. The analsyt i follow is excellent and said at $100 plus it was going to hit the ditch. Now? Hold your fire power til 4Q it could be the best buying opp in YEARS. We will look for low $30s.

      Aug 11, 2015 11:52 AM

      I THOUGHT someone posted a year ago……..HSBC is controlled by Rothchild?

        Aug 11, 2015 11:43 AM

        Probably…

    Aug 11, 2015 11:32 AM

    Sorry for the auto correct. Very small window on these phones.
    BTW i posted 3 moths ago to Birdman a HOD.TO chart and said i was buying.
    Boom to da moon.