OPEC Has Overinflated Its Output Capacity
By Tiffany Kary
NEW YORK (Dow Jones) - The Organization of Petroleum Exporting Countries' limited production capacity has been a "dirty little secret" that is bound to cause problems, said John Kilduff, an analyst at Fimat USA Inc.
"They can't handle the Venezuelan situation. In spite of claims that production is ramping up, we just haven't seen that," Kilduff told CNBC Friday.
The Wall Street Journal reported Friday that senior OPEC officials have acknowledged that increased production can no longer suppress rising prices. The oil market has been hit by a strike in Venezuela, a harsh winter in the U.S. and the threat that hostilities over Iraq could disrupt supplies.
Limited production is serious enough that it may not be able to keep the world humming at the pace it's accustomed to, Kilduff said.
"If Iraqi oil is to go off the market - they are producing 2 million barrels a day, several hundred thousand of which come to the U.S., it's a major gap that can't be filled by them, or anyone else for that matter," Kilduff said.
The analyst added that Saudi Arabia's claims that it can meet any order aren't true.
"The numbers just don't add up for them. The numbers we can glean from the exports, the shipping materials, tell us they are upwards of 9 million barrels a day, versus a capacity of 10 (million), Kilduff said.
Kilduff said the only reassuring statistic is that combined strategic reserves around the world would be enough to put 12 million barrels a day on the market for about 45 days.
Fimat USA Inc. tracks and forecasts oil markets.
© 2003 Dow Jones Newswires. |
