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.