The Global News Source for the World of Science
30 August 2018Lab Chat
Abu Dhabi’s principal crude oil producer has indicated that it is ready to pump several hundreds of thousands of barrels of oil more per day, if the situation warrants it. Abu Dhabi National Oil Company (ADNOC) has announced that it has the capacity to deliver more oil immediately if the Organisation of Petroleum Exporting Countries (OPEC) requires extra supply to meet demand.
OPEC had capped production back in 2016 in an attempt to boost global prices for crude oil, but appears to have succeeded in that particular mission and the organisation agreed to raise those caps in June of this year. The news will be welcome to oil-importing countries such as the USA, who have been calling on OPEC to inject more barrels into the market to stabilise prices.
ADNOC has a total capacity of 3.3 million barrels per day and is set to boost that capacity to 3.5 million by the end of 2018. In June, the company came close to reaching that threshold by pumping 2.89 million barrels, a gain of 20,000 on the previous month. The increase came as a result of increased demand from China and Japan, leading to a nine-month peak in condensate and crude oil exports.
Now, ADNOC has indicated it is ready and willing to match its capacity at the drop of a hat if OPEC deems it necessary. According to a press statement, the state-owned producer “has the ability to increase oil production by several hundred thousand barrels of oil per day, should this be required to help alleviate any potential supply shortage in the market.”
Since the announcement of the production cap two years ago, oil prices have appreciated globally by 3%. However, not everyone is happy about the development, with US President Donald Trump a particularly vocal critic. He has accused OPEC of manipulating the price of the commodity on the stock market and called for member countries to increase supply by two million barrels per day.
Led by Russia and Saudi Arabia, the consortium has responded to his concerns and in June agreed to boost production by one million barrels daily. However, not all members appear to be singing from the same hymn sheet. Some, including Libya and Venezuela, have not been delivering as many barrels as they are capable of, fuelling further deficits and raised prices. ADNOC are willing to bridge that divide should the circumstances deteriorate further.
Each oil-producing country has a set allocation of oil for each importing customer. Thanks to the 2016 resolution by OPEC, ADNOC (and other producers around the globe) had been supplying their clients with less oil than that originally agreed. Under the terms of the deal, each party can supply or import between 5% and 10% less or more than the agreed amount without issue.
These discrepancies are normally announced by the supplying country in anticipation of the coming month. Since no announcements were made by ADNOC in the run-up to August, it is to be assumed that their customers will receive the full allocation of crude oil as agreed upon in the original terms.Download PDF