Stuart Staniford - Saudi Arabia Did Not Make Up For Libyan Oil

[hatrack]

http://3.bp.blogspot.com/-jU5u9aF8Pm0/TaWP4eZTpII/AAAAAAAABqs/snFZknL2Z7I/s400/Screen+shot+2011-04-13+at+7.55.52+AM.png

The OPEC MOMR came out late yesterday, but it adds to the picture from the IEA report mentioned yesterday morning. In particular, I can now present revised graphs for total liquid fuel production. Here's the last three year view (not zero scaled):

http://2.bp.blogspot.com/-i_jvNxgUJOQ/TaWRXu9TJ6I/AAAAAAAABqw/rGj-xdz22R0/s400/Screen+shot+2011-04-13+at+8.00.55+AM.png

Note that the rise that's been going in since last fall has now been abruptly interrupted by the Libyan situation, and total oil production has fallen by about 0.5mbd. This is about 0.6% of global production, but given that the world economy has been growing rapidly and needing about another 0.5mbd/month, the shortfall over what would have happened in a counterfactual world with no Middle Eastern unrest is more like 1.2% of global production.

EDIT

We can put the situation almost entirely down to two things: the fact that Libyan production has plummeted, and that Saudi Arabia has made no significant move to compensate. In fact, Saudi Arabia slowed down production increases that it had been making in prior months. First, here's all the Libyan data currently available:

http://2.bp.blogspot.com/-vWC17wi9oAU/TaWUCf_19RI/AAAAAAAABq4/lAztT98YzXM/s400/Screen+shot+2011-04-13+at+8.14.48+AM.png

So the world has abruptly lost something like 1.3mbd of oil production between mid February and March. Now there were a lot of news reports in the business press at the time this was first happening that Saudi Arabia was going to make up the difference.

EDIT

http://www.energybulletin.net/stories/2011-04-15/saudi-arabia-did-not-make-libyan-oil

[Canuckistanian]

1. So, Saudi Arabia won't make up the difference?

Or can't?

[bhikkhu]

2. Maybe both

They might be able to pull out all the stops and ramp production up, but it would be at a substantial cost to them, and at a substantial long-term risk to their oil fields.

There is no particular reason for them to ramp up, so answering whether they could or not is just a fairly pointless conversation-generator. Nobody really has anything they need that much, short-term, and ramping up puts their long-term prospects at risk by making their eventual decline slope both sooner and steeper.