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Saudi Arabia pumps oil at highest for decades

Kingdom's production reached over 10 million in November due to rising consumer demand, says official

Reuters, Wednesday 7 Dec 2011
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Views: 850

Top oil exporter Saudi Arabia said on Wednesday it was pumping at its highest level for decades in a clear message a week before a key OPEC meeting that it intends to meet customer demand with increased output if necessary.

A senior Saudi oil official told Reuters the Kingdom produced 10.047 million barrels per day (bpd) of crude oil 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 9.40 million bpd in October and 8.25 million bpd in November 2010.

The Organization of the Petroleum Exporting Countries meets in Vienna on 14 December to discuss production policy.

Analysts greeted the Saudi output announcement with some caution, suggesting it was 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 eastbound ships to feed the roaring Asian dragons."

Delegates say OPEC's Vienna-based secretariat will recommend the cartel 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 generous output target, a policy supported by Saudi Arabia, would allow oil inventories to build and help restrain oil prices, which have been at annual average record highs this year.

North Sea benchmark Brent crude futures have averaged close to $110 a barrel this year, a record high and a level that economists say may damage global economic growth.

OPEC's leading price hawk, Iran, appears to have given up its campaign to have Gulf Arab nations including Saudi Arabia cut back supply. Iranian Oil Minister Rostam Qasemi told Reuters on Monday Tehran would be guided by the OPEC secretariat.

Iran's change of heart appears to reflect a desire to avoid a second meeting this year under its chairmanship, as holder of OPEC's rotating presidency, that fails to secure a supply pact.

At a meeting in June, OPEC was split between price doves and hawks and failed to agree a deal for the first time in decades.

OPEC producers have said any restrictions on oil supply, including a ban on Iranian oil being discussed by the European Union, could push up prices even further.

OPEC Secretary General Abdullah al-Badri said on Wednesday Iranian oil supplies to Europe would be difficult to replace.

"I really hope there would not be a ban on Iranian crude by EU, it would be very difficult to replace," Badri said.

EU members take 450,000 barrels per day of Iranian oil, some 18 per cent of the Islamic Republic's exports.

Russia also weighed in against an EU ban on Iranian oil, saying such a move would be political.

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