Barron’s: OPEC Oil Cuts? Iran Pumps, Saudi Arabia & Venezuela Down

opec-calc-production-oct-2016Russ Dallen, a publisher, investor and Venezuela expert who just launched a long-short fund, intends to capitalize on Venezuela’s imploding political reality. He said his fund investments could include $70 billion in outstanding Venezuelan bonds, both the sovereign and the state-controlled oil producer Petroleos de Venenezula, or other indirect assets that are tied to Venezuela, he said. More from Dallen:

“According to the volumes that Venezuela submitted to OPEC, Venezuela’s production fell another 17,800 barrels per day (bpd) in October to 2.316 million bpd … long before PokemonGo made augmented reality famous, PDVSA was using “augmented reality” in their production and financial numbers. To compensate for that, in addition to the numbers submitted by Venezuela, OPEC has their own statistics team that counts production. OPEC’s statistics say that while OPEC production went up, Venezuela barely produced over 2 million bpd – 2.067 million bpd – in October …

Venezuela’s continuing production crash aside, there are two other important things to note from the OPEC report. Iran led the gains in output. Over the weekend, Iran’s President Hassan Rouhani reported at a formal opening ceremony for the oil fields west of the Karoun River near the border with Iraq, that their North Azadegan, Yadavaran and Yaran field production rose to about 250,000 bpd from just 65,000 in 2013. Rouhani says they will get it to 1 million bpd with the investments they are now seeking under newly generated rules. France’s Total (TOT) became the first western oil company to sign a preliminary new agreement last week, seeking to develop a natural gas field, working with China’s CNPC. The South Pars natural gas complex is slated to be the largest of its kind in the world. No word yet on how a Trump administration’s threatened return to sanctions on Iran might affect developments there.

The second non-Venezuela takeaway from the OPEC statistics is that OPEC production is over 33.643 million bpd and rising at a time when OPEC is talking about cutting production down to 32.5 million bpd. At the same time, OPEC noted that it was pumping almost a million barrels more than next year’s expected demand.”

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