Can. Saudi Oil Minister Ali al-Naimi, 11 Aug 2004: “The kingdom is well prepared to meet all requirements of the international oil companies if they need additional volumes, relying on its surplus production of more than 1.3 million barrels daily, which could be used immediately if required.”

Can’t. Algerian Energy Minister Chakib Khelil, 12 Aug 2004: “Even Saudi Arabia may not have what the market needs. I think we’re going to see high prices as long as the demand stays high.” Reuters.

Won’t. Iranian OPEC governor Hossein Kazempour Ardebili, 14 Aug 2004: “Now there are more than 2.8 million bpd of crude more than demand. There is no reason for OPEC members to increase production.” Financial Express. (Not sure where he got that number.)

Do It Yourself. OPEC President and Indonesian Energy Minister Purnomo Yusgiantoro, 14 Aug 2004: “We call to those in non-OPEC who have capacity in production to prepare to produce more.”

Wouldn’t Even If We Could. Iranian Oil Minister Bijan Namdar Zanganeh, 15 August, 2004: “Given the increased revenues from crude exports, hiking oil prices will be to the benefit of Iran. The higher the oil price, the more profitable oil industry development projects.” He attributed the record prices to political and military events, concerns over future oil supplies and OPEC’s inability to pump more oil than current levels. Turkishpress.com.

The OPEC meeting in September should prove interesting. I think we will see more of a hardening of the OPEC position along the lines staked out by the Iranians (Ardebili and Zanganeh)—i.e., no more. It might be packaged or spun differently, but when the actual production figures for the year are in, I suspect they are not going to be much, if at all, higher than we are seeing now.

The chart below and to the left (Click on charts to enlarge) plots the 2003 daily production of each OPEC member, as well as the percentage change from 2002 that volume represents. The chart to the right plots the estimated reserves of each OPEC country at the end of last year. The Saudis pump more, but also have more in reserve, than any of their OPEC cousins. (Data from the BP Statistical Review of World Energy)

Oman’s experience with Yibal (from which Shell ran into some of its reserves problems) provides a harsh lesson to Middle Eastern producers in the rapid decline of an overproduced field—even a premier field. The faster the OPEC members pump oil, the sooner they face the decline of their primary—sometimes only—economic resource.