Regional oil output boost fails to tame crude prices

The UAE and other Gulf oil heavyweights boosted production of crude sharply in the first two months of 2008 in an apparent bid to reverse a surge in prices but the move had no effect, according to official data.

Reporting its crude production to the Joint Oil Data Initiative (Jodi), Saudi Arabia said it lifted crude oil supply in January and February to one of its highest levels in many years, while the UAE, Kuwait and Iran pumped at near capacity.

Qatar, a retatively smaller oil producer but a major gas power, boosted its crude output to record levels in February. Saudi Arabia, the world's dominant crude supplier, said its output climbed to 9.216 million barrels per day (bpd) in February and an average 9.205 million bpd in January and December.

The February level was the Kingdom's highest production in more than two years and one of the highest in a decade.

But it remained far below the Kingdom's sustainable crude capacity of nearly 11.3 million bpd and it illustrated Riyadh's long-standing policy of maintaining a spare capacity of 1.5 to two million bpd as a cussion for any supply problem.

The UAE, one of the world's largest oil producers, pumped 2.716 million bpd in Feburary, up from around 2.700 million bpd in January. The output is close to the country's sustainable output capacity and is the highest since the Emirates began commercial crude exprots in early 1960s.

Kuwait said it boosted its production, including outptu from the Neutral Zone which it shares with Saudi Arabia, by nearly 200,000 bpd to a record high of 2.797 million bpd in February. Iran pumped at maximum capacity of around 4.120 million bpd, while Qatar raised production to its highest ever level of 862,000 bpd in February. The Riyadh-based Jodi, which groups more than 100 oil producers and consumers, gave no figures for March, but independent estimates showed Gulf crude output, mainly by Saudi Arabia, has remained as high as in February.

Oil analysts said they believed Gulf states were hiking output in tandem with the increase in oil prices, which began their historic climb above $100 a barrel in late 2007 and approached $120 last week.

"I don't think Saudi Arabia and its partners in the Gulf Co-operation Council want to see prices climb to this level and the increase in their output proves they want prices to be moderately lower," a Gulf-based analyst said.

"This of course excludes Iran, which has always favoured high prices."

Higher crude production by Gulf states and other Opec members, including Libya, have had no impact on prices as they remained at historically high levels.

 

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