Arab Today, arab today gcc oil output seen up 800000 bpd in 2012
Last Updated : GMT 05:49:56
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Arab Today, arab today

GCC oil output seen up 800,000 bpd in 2012

Arab Today, arab today

Arab Today, arab today GCC oil output seen up 800,000 bpd in 2012

Riyadh - Arabstoday

Gulf hydrocarbon producers are expected to boost their crude oil output by nearly 800,000 barrels per day in 2012 to offset an expected decline in Iran’s oil exports because of the US-led sanctions, according to a Western study. Saudi Arabia, the world’s oil basin, is expected to meet most of the Iranian oil loss given its massive spare capacity, said the study by the Washington-based Institute for International Finance (IIF). The Gulf Kingdom has already boost supplies from an average 9.2 million bpd to just below 10 million bpd and its average output could be as high as 9.7 million bpd through 2012, IIF said. It noted that Saudi Arabia, the UAE and other Gulf Cooperation Council (GCC) nations are the world’s largest producer of crude oil, accounting for about 20 per cent of global supply and 40 per cent of proven oil reserves. Spare production capacity in the region is now between 2.5-3.0 million bpd, enabling the key countries, especially Saudi Arabia, to meet any possible shortfall in oil exports from Iran stemming from the sanctions, it said. “We expect the region’s crude oil production to increase from an average of 16.5 million bpd in 2011 to 17.3 million bpd in 2012 to compensate for a likely reduction in supply from Iran as a result of the current sanctions.” The report showed Saudi Arabia’s production has remained close to 10 million bpd since September 2011, despite the recovery in Libyan supply and weaker global demand for oil. “We expect aggregate crude oil production by the GCC to rise by around 800,000 bpd, or an increase of five per cent in 2012, if the reduction in Iran’s oil exports is 800,000 bpd,” the study said. “t is likely that Saudi Arabia’s oil production will increase further in the second half of this year to accommodate additional cuts in Iran’s oil production.” IIF, which groups major western banks, said the increase was also needed to meet a projected rise in demand for OPEC oil by around 350,000 bpd to nearly 30.3 million bpd in 2012. It expected Iran’s average crude oil exports or production to be reduced by 800,000 bpd in 2012. “Saudi Arabia, the UAE and Kuwait could easily absorb such a loss by maintaining their current production through end-2012. This, combined with the recovery in Libyan oil output, will enable OPEC to increase its total output by nearly 550,00 bpd in 2012,” the report said. It said global oil demand is expected to increase by 900,000 bpd to 90.35 million bpd in 2012, adding that OPEC’s spare production capacity currently stands at around 3.2 million bpd, of which Saudi Arabia makes up by far the largest share, estimated at 2.5 million bpd. “Slightly more than one-third of the global increase is projected to be met by OPEC. Over the medium term, more than half of this increase in the global production of crude oil is expected to come from Saudi Arabia and Iraq.” IIF noted that more than 70 per cent of GCC exports (largely crude oil) are destined for Japan and emerging and developing Asian countries. Iran’s exports go mainly to Asia but a substantial share is destined for the EU. Greece, Italy, and Spain combined accounted for 18 per cent of total oil exports from Iran in 2011, according to the report, which said those countries need to find other sources to replace the affected oil imports. Also, Iran needs alternative buyers for its crude, most likely in Asia and at a significant discount, it added. “There is a small probability that the tensions around the sanctions against Iran will escalate into a military confrontation that would threaten the security of oil supplies from the Gulf region,” IIF said. “Even in this case, it would be difficult for Iran to close the Strait of Hormuz for more than a few days. It should be noted that Hormuz remained open to traffic during the Iran-Iraq war in the 1980s.”

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