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OPEC, Tight Oil and Russia

OPEC, Tight Oil and Russia thumbnail

The OPEC Monthly Oil Market Report is out with OPEC crude only production numbers for March 2015.


OPEC production was up 812,000 barrels per day. The increase came primarily from three countries:

Saudi Arabia

Saudi Arabia was up 347,000 barrels per day to 10,010,000 bpd.


Iraq was up 319,000 bpd to 3,625,000 barrels per day.


And Libya was up 165,000 bpd to 473,000 bpd.

Iran Zero

This is Iran zero based in order to show exactly how much sanctions have affected them. Iran was producing about 3.75 million bpd before sanctions. Then when sanctions the UN resolution for sanctions was passed in 2010, but before they were enforced, production began to drop, but very slightly. It was not until late 2011 and early 2012 before production began to fall rather steeply. Iranian crude only production is now around 2.75 million bpd, down about 1 million bpd, or 27 percent from their production level before sanctions.

Secondary Sources

Here is how all 12 OPEC nations fared in March. Notice Saudi Arabia says they were up a lot more than the “secondary sources” claimed they were. Iraq also claimed more increase than the secondary sources’ estimated. But Iraq is still claiming almost 300,000 bpd less than the secondary sources says they are producing.

Charts for all 12 OPEC countries can be found at on my OPEC Charts web page.

Art Berman says Saudi Arabia’s Oil-Price War Is With Stupid Money

Saudi Arabia is not trying to crush U.S. shale plays. Its oil-price war is with the investment banks and the stupid money they directed to fund the plays. It is also with the zero-interest rate economic conditions that made this possible.

Art’s point is that stupid money is funding the so called Tight Oil Revolution. This is a great article that everyone should read. Art has a chart showing that most tight oil companies were losing money even when prices were in the $90 to $100 range. And CLR, Continental Resources, seems to be the biggest loser of all.

The next two charts are from Art’s Stupid Money article.

Art 1

What does it cost to produce a barrel of light tight oil? Schlumberger says it cost around $75. The size of the bubble here represents the Exploration and Production capex spent. Tight oil is second only to the amount spent on land conventional. But land conventional produced about 42 percent of all oil produced while tight oil was about 4 percent.

Art 2

U.S. companies drilled almost 100 times more wells to reach the same daily production as Saudi Aramco. Strident claims of increased efficiency by tight oil producers sound absurd in this context.

But the Russian part of the above chart is what I wish to emphasize here. In 2014 Russia drilled 8,688 wells.

In 2009 Renaissance Capital oil and gas analyst Alex Burgansky said:

If you exclude all the drilling activity taking place every year, then Russian organic decline in production is close to 19%. To compensate for that organic decline, Russia drills somewhere between 5,000 and 6,000 wells every year.

5 to 6 thousand in 2009, 8 to 9 thousand in 2014. They are now drilling 3,000 more wells than they did five years ago and production has been flat for about a year and a half. Russia has their own version of the Red Queen.

JODI Russia

The last data point in this chart is February 2015.

peak oil barrel

6 Comments on "OPEC, Tight Oil and Russia"

  1. BobInget on Thu, 23rd Apr 2015 10:55 am 

    This investor is betting Saudi over-active
    production from 40 and 50 year old fields
    will end suddenly.
    It’s one thing to be compelled to ‘keep Red Queen Drilling’ but always getting oil in return, never-mind cost.

    Quite another for the freaky old highly productive cow to suddenly die leaving only ‘average’ younger cows behind.

    (If water flood gets cut off, even for a few weeks, due to a political miscalculation,
    (Yemen) the Saudis are done for).
    This of course, is what Putin hopes for.

    BTW, relations with Russia are to be compared to Cold War era politics.

    The US has boots on the ground in Ukraine.
    Yes, 300 American military ‘advisors’ are training Ukrainian troops to better fight

    In Yemen al Qaeda is gaining ground with help from Saudi Airstrikes harassing Yemeni

    It’s AQ and IS that have long term designs on the real game of thrones, being kings of oil.

  2. Plantagenet on Thu, 23rd Apr 2015 10:56 am 

    Russia is very close to peaking. However, gains are still occurring in KSA, Iran, Iraq, and other countries.

    The oil glut continues.

  3. BobInget on Thu, 23rd Apr 2015 11:56 am 

    Swiped from another board: On topic
    by Nawar
    Anybody counting on the Saudi’s to crush the market (beyond what they did already) is fooling themselves. Saudi Arabia is basically pumping flat out in order to accommodate 3 objectives:

    – Meet exploding internal demand.
    – To provide feedstock for 800K in new refining capacity.
    – To maintain their global (post Libya collapse) market share.

    Saudi Arabia pumping more leads to higher prices medium term. It is counter intuitive, but the more Saudi Arabia pumps, the less spare capacity in the system, this in turn leads to a growing risk/scarcity premium in oil prices. Sanford Bernstein captured that relationship in of their research reports a year ago:

    Each 900K reduction in spare capacity leads to 13% potential increase in oil prices. This relationship holds true as long as the additional supplied oil has a market, and this new Saudi oil oil has a market:

    Vitol, the world’s largest oil trader, sees oil demand increasing by 1.2 million barrels a day this year, almost double its rate of growth last year. BP PLC’s (BP) trading arm is expecting oil demand will be at the top end of forecasts this year at around 1.4 million to 1.5 million barrels a day.

    Up until recently only people like me on a message board were saying that demand will grow by 1.5m barrels this year (compared to 700K-900K growth last year). Now we have BP expecting demand to grow by 1.5m barrels and soon we will have the EIA/IEA and OPEC saying it. The issue is by next year, the world will add at least another 1m barrels in supply, however by that time Saudi Arabia wont be able to supply that extra demand. If Iran comes back to the market, it maybe able to supply half of that demand, but that still leaves 500K to be supplied by higher cost producers, and this requires higher prices. Once the market re-balance in early 2016 prices will be materially higher and Saudi Arabia wont be able to do a thing about it.

  4. BobInget on Thu, 23rd Apr 2015 12:55 pm 

    Oh, maybe you heard;
    (KSA troops fixin to get asses kicked).

    And… 8 Iranian cargo ships turned round and
    went home.
    Iran has gone so far out of their way to avoid a confrontation. It’s better to let KSA self destruct.

    Saudi Arabia’s King Salman Abdulaziz on Tuesday ordered the deployment of an elite ground unit in the country’s ongoing campaign against Yemen’s Shia Houthi militant group, Saudi’s official news agency has reported.
    King Salman has issued a royal decree to deploy National Guard Forces in its ongoing military operation against Yemen’s Houthis – a campaign which, until Tuesday’s announcement, had been reportedly confined to air and naval bombardments.
    Riyadh refrained, however, from providing additional details on the planned deployment.
    Since March 25, Houthi positions across Yemen have been the target of frequent attacks by warplanes from Saudi Arabia and its Gulf-Arab allies.
    Fractious Yemen has remained in turmoil since last September, when the Houthis overran capital Sanaa, from which they have sought to extend their influence to other parts of the country.
    Riyadh says its campaign is in response to appeals by embattled Yemeni President Abd Rabbuh Mansour Hadi – who is currently in Saudi Arabia – to “save the [Yemeni] people from the Houthi militias.”
    The Houthis, for their part, have decried the offensive, describing it as unwarranted “Saudi-American aggression.”
    Some Gulf States accuse Shiite Iran of supporting Yemen’s Houthi insurgency.
    – See more at:

  5. Makati1 on Thu, 23rd Apr 2015 7:12 pm 

    I don’t see a real increase in oil production or price this year or any other. The KSA is trying to stay alive at this point and they cannot cut until others do, so it is stalemate. The fraking Red Queen is getting very tired and the oil fields are getting close to ‘retirement’ age.

    With all that is going on in that part of the world, I see only more uncertainty and an eventual collapse of the ME’ whole oil system. If it can hold together, a lot more ME oil will be flowing East, not West in a few years.

    The variables around the world are so plentiful, that anyone who claim they know what is going to happen, is a liar. Buckle up!

  6. Nony on Sun, 26th Apr 2015 9:28 pm 

    In the comments, Ron is making some very firm comments about oil not moving downward and about it being impossible for the Bakken shale to supply the Three Forks. However, this IS THE conventional view of practicing geologists. For instance of the USGS:

    Perhaps, Ron should be a little bit more humble and curious.

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