Total crude oil production by the members of the Organization of the Petroleum Exporting Countries (OPEC) averaged 30.3 million barrels per day (bbl/d) in fourth-quarter 2012, down from 31.1 million bbl/d in the prior quarter. In the March Short-Term Energy Outlook (STEO), EIA projects that OPEC will cut crude oil production from an average of 30.9 million bbl/d for full-year 2012 to 30.3 million bbl/d in 2013 in response to expected non-OPEC supply growth. Total OPEC petroleum liquids production will not decline as much because of growth in OPEC's condensate and natural gas liquids. When non-crude liquids are included, total projected OPEC production declines from 36.4 million bbl/d in 2012 to 36.0 million bbl/d in 2013.

With liquids production in the United States projected to rise by 835,000 bbl/d in 2013, and Saudi Arabia continuing in its traditional role as the main swing producer among the OPEC countries, it is likely that total U.S. liquids production will exceed that of Saudi Arabia this year. However, as discussed in a recent article (see EIA's This Week in Petroleum December 19, 2012), the ordering of producers depends upon accounting conventions used to make the comparison. While both U.S. and Saudi production trends are closely watched by market analysts, any future crossing of production paths is more likely to fall into the category of an interesting factoid rather than a watershed event. Regardless of how much the United States is able to reduce its reliance on imported liquid fuels, it will not be insulated from price shocks that affect the global oil market. And Saudi Arabia will likely continue in its unique role as the only holder of significant spare oil production capacity among world oil producers.

The forecast reduction in production by OPEC member countries during 2013 suggests an increase in world surplus production capacity, a widely-watched oil market indicator. EIA estimates that OPEC surplus production capacity was about 2.8 million bbl/d in February, an increase of 0.8 million bbl/d over year-ago levels, but still 0.2 million bbl/d lower than the previous three-year average. Based on EIA projections, OPEC surplus capacity will average 2.9 million bbl/d in 2013 and 3.4 million bbl/d in 2014. In all cases, Saudi Arabia is the dominant holder of surplus capacity. These estimates do not include additional capacity that may be available in Iran but that is currently offline because of the effects of U.S. and European Union sanctions on Iran's ability to sell its oil.

OPEC crude oil production seen declining in 2013

While the sanctions on Iran have been an ongoing story, the death of Venezuelan President Hugo Chávez and the outcome of the ensuing succession process could have implications for that country's oil sector. For now, EIA is maintaining its Venezuelan production forecast on the assumption that current policies related to the oil sector are continued. For more information, see "Political risks focus attention on supply of Venezuelan oil to the United States."

EIA has lowered its expectations for oil production in Libya to reflect persistence of the technical problems and political pressures that have already curtailed output. Libya's precarious security environment creates downside production risk from the potential for additional disruptions due to attacks, strikes, or poorly maintained infrastructure.

In Iraq, payment disputes between Baghdad and the Kurdistan Regional Government are projected to lead to loss of output in the north that, at least partly, offsets increased crude oil exports from Iraq's southern fields. EIA, like many others, has frequently revised its expectations for Iraqi production growth downward because of ongoing political difficulties.

Since 2007, Angolan production increases have been followed by subsequent declines. Technical and maintenance problems have plagued some of Angola's deepwater fields for years, particularly the Greater Plutonio project, and will continue to limit Angola's crude oil production over the STEO forecast period. Nonetheless, EIA still anticipates Angolan crude oil output to gradually increase over the next two years as new deepwater production more than offsets chronic maintenance–related declines.