OPEC needs to hike Q3 oil output by 900,000 bpd to meet demand

The International Energy Agency (IEA) has said that OPEC would need to boost its output in the third quarter by some 900,000 barrels per day from April 2014 level to meet rising global demand.

In its latest monthly oil market report, the IEA also raised its global oil demand forecast for 2014 by some 65,000 barrels per day to 92.8 million barrels per day but cut its forecast for non-OPEC supply growth. Global oil supply rose by 700,000 barrels per day month on month in April to 92.1 million barrels per day with roughly half of the increase stemming from OPEC producers.

OPEC output rose by 405,000 barrels per day to 29.9 million barrels per day in April. OPEC production has been curtailed in recent months by the fall in production in crisis-hit Libya and security problems in Iraq that have halted northern crude exports.

The IEA said it was unclear whether Libya would be able to keep its ports open and unlock its exports, while Iraq faces “renewed security threats” in the north. The higher demand estimate had a knock-on impact on the call on OPEC, which represents the amount of crude the oil exporting group would have to pump to balance supply and demand. The IEA now sees the call on OPEC for the second half of 2014 at 30.7 million barrels per day, 140,000 barrels per day higher than it estimated in its previous report. 

Saudi Arabia’s crude output averaged 9.66 million barrels per day in April, up by nearly 100,000 barrels per day from the previous month, the IEA said, adding that production was expected to rise again.

Crude burn typically falls to yearly lows of 300,000-325,000 barrels per day in the first quarter before demand picks up for fuel oil burn at power plants starting in the second quarter, averaging last year between April and September at around 615,000 barrels per day.

Iranian crude production rose marginally in April by 30,000 barrels per day to 2.83 million barrels per day but estimated import volumes by other countries slid by some 180,000 barrels per day to 1.11 million barrels per day compared with March. Imports of Iranian crude reached a 20-month high of 1.58 million barrels per day in February but have since edged lower. 

Iran’s exports in April rose to China by 60,000 barrels per day to 615,000 barrels per day to South Korea by 70,000 barrels per day to 130,000 barrels per day and to Turkey by 30,000 barrels per day to 125,000 barrels per day. But Iranian crude exports last month slumped to India by 185,000 barrels per day to 200,000 barrels per day and to Japan by 105,000 barrels per day to just 35,000 barrels per day.

Iraqi production rose by 140,000 barrels per day to 3.34 million barrels per day in April following the start of new production in the south of the country.