Alright. Not all of the JODI numbers totaling oil production for January, 2011 are in yet, but the OPEC numbers are.
Those numbers are not good.
JODI indicates that OPEC's production dropped from 30,342,000 barrels of crude oil in December, 2010 to 27,926,000 barrels in January, 2011 -- a fall of roughly 8% in one month.
Now, the good news is that OPEC's December production numbers were apparently revised in the last month, showing a slight improvement over their November numbers, instead of a slight decline.
The very, very bad news is...
The very, very bad news is that, even taking into account Saudi Arabia's reduction in exports, official OPEC production figures in December -- you remember, the month when the 90% of global production surveyed by JODI dropped 14% overall -- only declined by 2% (now revised). In other words, that dramatic drop of 14% must have resulted from production falling off elsewhere (mostly, it appears, in APEC). Now, in fairness, the revised numbers for November and December show 67,582,000 and 62,923,000 respectively -- an apparent global fall of only 7%, if these numbers can be trusted. (That's still devastating.)
But, you see, that drop was essentially a falloff in non-OPEC production, almost entirely in APEC.
But now we're looking at an 8% drop in OPEC production in January -- and that's only the beginning of our problems.
Why? Because of the countries experiencing major demonstrations and the beginnings of revolutions in January, only Algeria and Egypt are major oil producers -- and Algeria's oil production barely moved at all, while Egypt is shown to have zero production for both December and January. Now statistically, it's been demonstrated that oil-producing countries which endure major revolutions/disruptions almost never return to their previous heights of oil extraction.
Which means more substantial falls in production in certain OPEC countries could come over February, March and the months to follow.
Meanwhile, there is the question of what happened to the oil that ceased to be produced in December, perhaps the most fascinating element of all. You see, China abruptly went from almost 4 million barrels-a-day to zero from November to December -- a change so dramatic, given a lack of major disasters, it may very likely be a political decision, if one affected by declining rates of extraction. If so...
That may suggest the Chinese government has decided to either cease production and/or to stockpile what they produce, while meeting their petroleum needs on the comparatively cheap international market. This strategy would give China an oil supply capable of handling her basic requirements and buffering her from other international disruptions.
A fascinating action, if they have done this, but the Chinese leadership has evidently been aware of the risks of peak oil for some years now, and has supposedly been planning accordingly. On the other hand, we do not know how much of that precipitous drop is simply geology, and/or the limitations of modern oil-production technology.
Still, there is one more thing to consider. China was not the only dip in international oil production in December, and this January OPEC drop is precipitous, given that it precedes most of the disruptions of February and March. Which highlights the larger question: What will the APEC, Eurostat and IEA/OECD numbers tell us?
OPEC has experienced a sharp drop that is almost certainly driven by the practical limits of how much it can produce, given that most of its members have probably hit the peak of their production. OLADE has gone from 6,366,000 to 3,160,000 barrels-per-day. If those numbers hold, that is a drop of just over 50%.
Please note: While I have generally offered some optimistic possibilities on some of the more shocking descents in extraction, overall the situation looks extremely grim, especially given the ongoing upheavals in the Middle East and the way the OLADE and pre-revolution OPEC figures show how dramatically production can fall with very little warning.
Also note: Even if a few major countries such as Saudi Arabia or China have reason to hold back or restate their production for strategic reasons, very few nations have any motivation to make such dramatic public changes -- and yet we are seeing crashing flow rates regardless.
Which could portend many things, none of them good.