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OPEC to boost crude exports before refinery halts

09.27.2013  | 

Refiners typically trim imports at the end of the third quarter while performing maintenance as summer demand in the northern hemisphere for gasoline and diesel dwindles.



The Organization of Petroleum Exporting Countries will increase crude shipments by 1% next month as they maximize flows before refineries are shut for maintenance, according to tanker tracker Oil Movements.

OPEC, which supplies about 40% of the world’s oil, will raise exports by 230,000 bpd to about 23.9 million bpd in the four weeks to Oct. 12 compared with the period to Sept. 14, the researcher said Friday in a report. The figures exclude two of OPEC’s 12 members, Angola and Ecuador.

“It’s what you’d expect to happen at this time of year as we start to get into refinery maintenance season,” Roy Mason, the company’s founder, said by phone from Halifax, England. “It’s boring old seasonality and exports are likely to drift downward until the end of October or start of November.”

Refiners typically trim imports at the end of the third quarter while performing maintenance as summer demand in the northern hemisphere for gasoline and diesel dwindles.

Middle Eastern shipments will climb 2.4% to 17.72 million bpd to Oct. 12, compared with 17.31 million bpd in the month to Sept. 14, according to Oil Movements. Those figures include non-OPEC nations Oman and Yemen.

Crude on board tankers will increase 0.7% to 483.79 million bbl on Oct. 12, data from Oil Movements show. The researcher calculates volumes by tallying tanker bookings, and excludes crude held on vessels for storage.

OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. It will next meet in Vienna on Dec. 4.

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I would think that oil production, at a peak and in a caertl, would naturally undulate, if only because of imperfect information between the parties and the nature of incremental additions to production. A teacher told me when he was growing up, his farmer father would always plant what was abundant and low priced last year, because all of his neighbors would switch over to what was scarce and expensive the last year. Thus, OPEC may be operating on a theory of, "Since my neighbor and I both dropped production last month/quarter, I can increase my production and capture a little extra at higher prices," only to be met with other countries doing the same. And then everyone decides, simultaneously, to shut off the damaging/expensive/less profitable wells, because everyone else is producing at the same time. Incremental additions: I would expect that at or near peak production, gains come in small jumps which slowly peter out, rather than in big jumps which can be turned off and on at will, by relying on natural pressure. Jump, decline, jump, decline: if there are enough countries doing this, it would be smooth as the number of jumps filters out the shock from each; but as the number of jumps decreases, the impact of each individual jump is felt more strongly in isolation.I see some lagged response to the loss of Libya in the figures, but the drop from August highs through September and October suggests that OPEC was unable/unwilling to sustain this full increase.OPEC seems to say that they are going to cap production at 30mb/d for this year and next, and that economic growth will exceed oil demand growth by a factor of four. Let's see in March if production is still within 200kb/d of 30mb/d, without Libya. I would guess not.

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