Doha: Saudi Arabia said on Wednesday it was pumping at its highest rate for decades in a signal a week before a key Organization of the Petroleum Exporting Countries (Opec) meeting that it intends to meet demand with more output if necessary. Opec meets in Vienna on 14 December.
The announcement, which was greeted with some scepticism by analysts, comes at a time when the European Union is discussing imposing a ban on oil from Opec member Iran, a move that could put further upward pressure on oil prices in some markets.
A senior Saudi oil official said the Kingdom produced 10.047 million barrels per day (bpd) of crude excluding condensate in November, well above previous estimates. “Saudi Arabia’s production has been fluctuating this year. It has reached over 10 million barrels (per day) in November excluding condensate because consumer demand was higher,” the official said.
A Reuters survey of Opec output last month estimated Saudi crude oil supply in November at 9.45 million bpd, up from 9.4 million bpd in October and 8.25 million bpd in November 2010.
Analysts responded cautiously to the Saudi output figure, interpreting it as a signal to fellow Opec members that oil demand was high and output should not be restricted. “This is the highest output since 1980,” said Michael Poulsen of Global Risk Management. “All the extra produced oil is either consumed in the Middle East or on east-bound ships to feed the roaring Asian dragons.”
Harry Tchilinguirian, analyst at BNP Paribas SA, said Saudi Arabia had never produced 10 million bpd in the last decade. “We do not buy that number,” Tchilinguirian said. “This may simply be case of the usual pre-Opec meeting build-up in communication where Saudi is showing its strength as the main holder of spare production capacity.”
Opec delegates say the cartel’s Vienna-based secretariat will recommend it agree an output target of 30 million bpd for the first half of 2012, above anticipated demand for Opec crude of 29.9 million bpd in the first quarter and 28.7 million bpd in the second quarter.
Adopting such a high output target, a policy likely to be supported by Saudi Arabia, would allow oil stocks to build and help restrain oil prices, which have been at historic highs. North Sea benchmark Brent crude futures have averaged close to $110 a barrel this year, a record high.