A contrasting 2012 for Middle East oil producers

18 June 2013

Drops in crude output from Iran, Syria and Yemen offset by record year for other producers

The Middle East’s crude production rose by 0.9 per cent in 2012, despite significant drops in output from Iran, Syria and Yemen.

Figures published in the UK’s BP’s annual statistical review of world energy state that Iran’s oil production fell by 16.2 per cent, Syria’s by almost 50 per cent and Yemen’s by 21.4 per cent.

Syria’s and Yemen’s production decreases were caused by continued unrest in both countries whereas Iran’s was due to sanctions imposed on the sale of the Islamic Republic’s hydrocarbons in July 2012.

Elsewhere in the region, major oil producers took advantage of record annual average oil prices of more than $111 and the drop in Iran’s production to boost exports. This in turn led to record oil revenues for most major producers in 2012.

Saudi Arabia boosted production by 3.7 per cent to more than 11.5 million barrels a day (b/d). The kingdom’s share of the world production is 13.3 per cent and filling the shortfalls caused by Iran secured its reputation as the global swing producer.

Iraq enjoyed the highest rise in production with an 11.2 per cent uplift. The Gulf state’s production has been boosted by 625,000 b/d since 2010 and is now 3.2 million b/d.

Kuwait’s production also moved over the 3-million-b/d mark, to 3.1 million b/d in 2012 after an 8.9 per cent rise in production. The UAE enjoyed a modest 1.6 per cent rise in output and produced 3.38 million b/d.

The figures prove the Middle East maintains its status as the world’s most vital producer of crude oil. The region accounted for more than 32 per cent of global production in 2012.  

There are also now five countries in the Middle East producing more than 3 million b/d, compared with only Iran and Saudi Arabia in 2010. Smaller producers such as Qatar and Oman are also performing well, with the former’s condensate production pushing its oil output to almost 2 million b/d.

However, the future is not assured for any of the region’s big oil players. The US enjoyed a 13.9 per cent surge in production due to its oil shale operations. This helped push its production to almost 9 million b/d 2012, a worrying sign for Opec producers.

The extra production from non-Opec producers is also going to lead to cheaper crude prices in the mid-term. Large amounts of additional Opec capacity have always historically lead to lower crude prices. If Iran can sort out its problems with its nuclear aspirations, then that will inject even more spare capacity into the Opec supply line.

The region’s producers enjoyed a record 2012 and that is to be celebrated. However, more investment is needed in the Middle East’s maturing oil assets if it is to weather the coming storm of lower prices and increased non-Opec crude production.

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