Analysis & Projections

The Availability and Price of Petroleum and Petroleum Products Produced in Countries Other Than Iran

Release date: February 27, 2014
Next release date: April 24, 2014

January - February 2014 Update

  • The U.S. Energy Information Administration (EIA) estimates that the global petroleum and other liquids1 consumption outpaced production in January and February, resulting in a 0.4-million-bbl/d average withdrawal from global oil stocks (Table 1, Figure 1). Although the recent withdrawals were less than the 1.3-million-bbl/d decline in global stocks in November and December, global surplus crude oil production capacity remains low and unplanned global supply disruptions remain elevated compared to historical levels, both indicating continued general market tightness.
  • International crude oil prices in January and February were nearly unchanged compared with November and December 2013. North Sea Brent front month futures prices averaged about $110 per barrel for the five-trading-day period ending February 25, an increase of $1 per barrel compared with the five-trading-day period ending December 17 (Figure 2).
  • Global petroleum and other liquids consumption2 during January and February averaged 90.6 million bbl/d, 0.9 million bbl/d lower than the previous two-month period but 1.1 million bbl/d higher than the same time last year. The consumption decline over the past two months mostly reflects seasonal patterns, particularly in the U.S. transportation sector because of a slowdown in driving that typically occurs in January and February. Developing and emerging countries accounted for almost all of the year-over-year consumption growth (Table 2).
  • Global petroleum and other liquids production in January and February averaged 90.2 million bbl/d, similar to the previous two-month period but 1.3 million bbl/d higher than the same time last year. Production from countries outside of the Organization of the Petroleum Exporting Countries (OPEC) grew by 1.8 million bbl/d compared with the same time last year, more than offsetting declines from OPEC countries, particularly in Libya (Table 3).
  • Global surplus crude oil production capacity averaged 2.1 million bbl/d in January and February, 0.1 million bbl/d higher than the average during the previous two-month period but 0.5 million bbl/d lower than the year-ago level (Table 3). The estimate of effective surplus capacity does not include additional capacity that may be technically available in Iran, but which is offline due to the impacts of U.S. and European Union (EU) sanctions on Iran's ability to sell its oil.
  • Global stock draws in January and February were below the 0.7-million-bbl/d level during the same time last year, which is reflected by a decrease in backwardation (when near-term prices are greater than further dated ones) in the Brent futures curve. The 1st-13th month spread for the Brent futures curve averaged about $5 per barrel during January and February 2014, about $3 per barrel less than January and February 2013 (Table 1).
  • OPEC crude oil supply disruptions averaged 2.3 million bbl/d in January and February, 0.2 million bbl/d lower than the average in November and December because of a partial recovery in Libya's production, although Libya continues to experience swings in production (Figure 4). Unplanned supply disruptions among non-OPEC producers averaged 0.7 million bbl/d in January and February, 0.1 million bbl/d higher than the average in November and December because of higher outages in South Sudan and new outages in the North Sea and Indonesia (Figure 5). EIA's estimates of unplanned outages account for crude oil only among OPEC producers and all liquid fuels among non-OPEC producers. These estimates of unplanned outages exclude normal maintenance and reflect the level of volumes shut in relative to an assessment of effective production capacity, which is periodically updated.
  • Iran's petroleum and other liquids production averaged 3.4 million bbl/d in January and February, of which 2.8 million bbl/d was crude oil. Iran's liquid fuels production remains below the previous three-year average of 3.8 million bbl/d (Table 1). Iran's crude oil production and exports have been reduced by sanctions that have impeded its ability to carry out investment in oil projects necessary to offset natural declines in production. Sanctions have also limited Iran's ability to sell oil. The Joint Plan of Action announced on November 24, 2013 (implementation started on January 20, 2014) does not remove the core sanctions affecting Iran's oil sector, although it does suspend sanctions barring all EU insurance companies from providing protection and indemnity (P&I) coverage to vessels that carry Iranian oil. Over the past year, Iran and the countries that are continuing to import Iranian oil have increasingly been able to find alternatives to P&I coverage from EU companies.
  • U.S. domestic crude oil prices remain subject to the local supply and demand dynamics of the Midwest and U.S. Gulf Coast. The price spread between Brent, a global waterborne light sweet crude, and West Texas Intermediate (WTI) varied between $7 and $15 per barrel during January and February, with price spreads tending to decline over the last four weeks. The spread between Louisiana Light Sweet, a Gulf Coast crude similar to WTI, and WTI itself widened in January and February compared to the prior two-month period, but was generally below the Brent- WTI spread. WTI averaged about $103 per barrel for the five-trading-day period ending February 25, an increase of about $5 per barrel from the five-trading-day period ending December 17 (Figure 2).
  • EIA revised the preliminary estimates of petroleum and other liquids production and consumption for November and December 2013 published in the previous edition of this report. Global petroleum and other liquids production was revised downward by 0.4 million bbl/d to average 90.1 million bbl/d, while global consumption was revised upward by 0.5 million bbl/d to average 91.5 million bbl/d, resulting in an implied average global stock draw of 1.3 million bbl/d. EIA's estimate of global unplanned supply disruptions for November and December was revised upward by 0.1 million bbl/d to average 3.1 million bbl/d, mainly due to higher disrupted volumes than expected in Libya.
Table 1. Summary of Estimated Liquid Fuels Quantities and Prices
Item January 2014 February 2014 January - February 2014 Average January - February 2013 Average 2011 - 2013 Average
Global Petroleum and Other Liquids (million barrels per day)
Global Petroleum and Other Liquids Production (a) 90.0 90.3 90.2 88.8 88.9
Global Petroleum and Other Liquids Consumption (b) 90.2 91 90.6 89.5 89.4
Biofuels Production (c) (million bbl/d) 1.5 1.4 1.4 1.6 1.9
Biofuels Consumption (c) (million bbl/d) 1.8 1.8 1.8 1.8 1.8
Iran Liquid Fuels Production (million bbl/d) 3.4 3.4 3.4 3.4 3.8
Iran Liquid Fuels Consumption (million bbl/d) 2.0 1.9 2.0 1.8 1.7
Petroleum and Petroleum Products Produced and Consumed in Countries Other Than Iran (million barrels per day)
Production (d) (million bbl/d) 85.1 85.5 85.3 83.8 83.3
Consumption (d) (million bbl/d) 86.4 87.3 86.8 86.0 85.8
Production minus Consumption -1.2 -1.9 -1.5 -2.1 -2.5
World Inventory Net Withdrawals Including Iran (million bbl/d) 0.2 0.7 0.4 0.7 0.4
Estimated OECD Inventory Level (e) (million barrels) 2,535 2,517 2,526 2,646 2,661
Surplus Production Capacity
OPEC Surplus Crude Oil Production Capacity (f) (million bbl/d) 2.1 2.2 2.1 2.7 2.4
Oil Price Level
WTI Front Month Futures Price (g) ($ per barrel) 94.86 100.33 97.23 95.06 95.77
Brent Front Month Futures Price (h) ($ per barrel) 107.11 108.77 107.83 114.1 110.43
RBOB Front Month Futures Price (i) ($ per gallon) 2.65 2.75 2.69 2.93 2.86
Oil Price Time Spread
WTI 1st - 13th Month Futures Spread ($ per barrel) 7.18 9.59 8.22 0.4 0.41
Brent 1st - 13th Month Futures Spread ($ per barrel) 4.85 5.33 5.06 7.97 4.86
Note: The term "petroleum and other liquids" encompasses crude oil, lease condensate, natural gas liquids, biofuels, coal-to-liquids, gas-to-liquids, and refinery processing gains, which are important to consider in concert due to the inter-related supply, demand, and price dynamics of petroleum, petroleum products, and related fuels.
(a) Production includes crude oil (including lease condensates), natural gas liquids, other liquids, and refinery processing gains.
(b) Consumption of petroleum by the OECD countries is synonymous with "products supplied," defined in the glossary of the EIA Petroleum Supply Monthly, DOE/EIA-0109. Consumption of petroleum by the non-OECD countries is "apparent consumption," which includes internal consumption, refinery fuel and loss, and bunkering.
(c) Biofuels production and consumption are based on EIA estimates as published in the International Energy Statistics. Biofuels production in the third quarter tends to be at its highest level in the year as ethanol production in Brazil reaches its seasonal peak and is typically lowest in the first quarter as seasonal production falls in the South/South-Central region of Brazil.
(d) Global production of petroleum and petroleum products outside of Iran is derived by subtracting biofuels production and Iran liquid fuels production from global liquid fuels production. The same method is used to calculate global consumption outside of Iran.
(e) Estimated inventory level is for OECD countries only.
(f) EIA defines surplus oil production capacity as potential oil production that could be brought online within 30 days and sustained for at least 90 days, consistent with sound business practices. This does not include oil production increases that could not be sustained without degrading the future production capacity of a field. It also does not include additional capacity that may be available in Iran, but which is currently offline due to the impacts of U.S. and EU sanctions on Iran's ability to sell its oil.
(g)WTI refers to West Texas Intermediate crude oil traded on the New York Mercantile Exchange (NYMEX), owned by Chicago Mercantile Exchange (CME) Group.
(h) Brent refers to Brent crude oil traded on the Intercontinental Exchange (ICE).
(i) RBOB refers to reformulated blendstock for oxygenate blending traded on the NYMEX.
Note: February prices include data through market close on February 25, 2014.
Source: U.S. Energy Information Administration.

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Footnotes
1 The term "petroleum and other liquids" encompasses petroleum and petroleum products and close substitutes, including crude oil, lease condensate, natural gas liquids, biofuels, coal-to-liquids, gas-to-liquids, and refinery processing gain.
2 The growth rates referenced in this report may not exactly match corresponding values in tables as a result of independent rounding.