OPEC crude oil output slipped lower in March, dropping over 1 percent as the halt in Libyan exports takes effect and it seems that OPEC’s star exporter, Saudi Arabia has missed the target on filling the oil supply gap.
OPEC oil production slipped 363,000 barrels, or 1.2 percent, to an average 29.022 million barrels a day, the lowest level since September, according to the survey of oil companies, producers and analysts.
Daily crude oil output by OPEC member countries with quotas, all except Iraq, decreased 353,000 barrels to 26.437 million, 1.592 million above their target.
Higher Oil Exports from Saudi Arabia to “Take a While”
“The numbers show that it will take a while before the Saudi’s and others make up for Libya’s missing barrels. We should see the total rise in April. This explains why Brent is above $115.” said Rick Mueller, director of oil markets at Energy Security Analysis, Massachusetts.
Saudi Arabia, OPEC’s biggest producer, increased output by 300,000 barrels, or 3.4 percent, to 9 million barrels a day in March, the highest level since October 2008. Saudi Arabia exceeded its oil export quota by 949,000 barrels.
Saudi Arabian Oil Co. Chief Executive Officer Khalid Al-Falih said last month that the kingdom is “ready to supply incremental change in demand,” to cover any shortfall from Libya.
Saudi Arabia apparently has about 3.5 million barrels of spare daily oil production capacity, al-Naimi said this month and could increase oil output by 2.5 million barrels within 30 days. This high target remains “too high” in the eyes of many experts who believe that Saudi Arabia’s oil production is nearly maxed out.
The United Arab Emirates bolstered output by 160,000 barrels to 2.51 million barrels a day, the second biggest increase this month.
Meanwhile, Mexico’s Energy Minister Jose Meade said oil shortages caused by the Libyan crisis, could be covered by production in other OPEC nations and existing inventories.
If conflict does not spread to other Middle Eastern nations, oil prices should fall back to levels seen before fighting erupted in major oil producer Libya, Meade told the Reuters Latin American Investment Summit.
He said that current high oil prices will benefit Mexico as the world’s number 7 oil producer but a strengthening peso will limit gains for the country’s state run oil company Pemex.