The self-certificated production numbers provided to the Opec secretariat by member countries for publication in the organisation’s Monthly Oil Market Report (MOMR) are viewed with scepticism by the “secondary sources” — including the likes of Argus — that the IEA and, tellingly, the secretariat itself prefer to rely on.
But that sort of misses the point. The numbers issued by the member governments are a weapon in the wars of manoeuvre over market share, quota, ceiling or whatever magic metric Opec is employing to further its strategy at the time.
Longer-in-the-tooth Opec watchers will remember the jockeying for quota allocation parity between the UAE and Kuwait, the similar jockeying between Iran and Iraq in Vienna as their respective armies committed slaughter on the battlefield, the bare-faced denials of gross overproduction by Venezuela, the attempts by Algeria to big-up its falling capacity and production.
A number that is interesting at the moment is Iran’s. Tehran is in a bit of a bind. It long trumpeted — in the face of widespread doubts — the speed with which it could ramp up production once US and EU nuclear-related oil sanctions were lifted. Crude supply and exports would rise by 500,000 b/d in the weeks that followed the removal of sanctions and a further 500,000 b/d in the next six months. It was important to push this line for the sake of domestic politics and also to begin the process of rebuilding Iran as an alternative power centre to Saudi Arabia within Opec.
But then came the Doha Four’s freeze proposal. Key Opec and non-Opec producers would nibble away at global oversupply by holding output at January levels. Clearly that was not going to be acceptable to Iran, committing it to a level achieved after just a few days of sanctions relief. So, Tehran said — as it had before — that it would countenance controls on its output only once it had regained pre-sanctions levels, reclaiming its “rightful” position in the Opec pecking order.
After the nuclear sanctions were imposed in 2012, observers scoffed at Iran’s self-declared production numbers for being too high — a political attempt to minimise the impact of the sanctions. But now its interest is in downplaying output growth for long enough for reality and declared numbers to converge, and to maximise the time it has before its traditional allies in the pro-production discipline camp in Opec lose patience and demand that Tehran practises what it has so long preached.
So, this week’s declared production figure for February was 3.385mn b/d, a paltry 15,000 b/d rise on January’s number, which was only 20,000 b/d up on December’s. Contrast these with other estimates and the outright numbers are high, but the increases are noticeably low. Argus puts February production at 2.93mn b/d, a rise of 50,000 b/d on January. But the aggregation of secondary sources published by the Opec secretariat on the very same page of the MOMR as the self-declared numbers, gives an outright number of 3.132mn b/d for February — not too far from Tehran’s number — but an eye watering 187,500 b/d up on January.
Mathematics in the service of man — a fitting slogan for Opec members’ statisticians.