OPEC Output Falls as Gulf Nations Step Up Delivery of Oil Cuts
OPEC’s output declined last month as several Persian Gulf producers stepped up their implementation of cutbacks aimed at balancing global oil markets.
Saudi Arabia, Iraq and the United Arab Emirates reduced production in December, the final month of a round of restrictions by the cartel before it presses on with new — and even deeper — curbs this year.
Output from the Organization of Petroleum Exporting Countries fell by 90,000 barrels a day to 29.55 million in December, according to a Bloomberg survey of officials, ship-tracking data and estimates from consultants including Rystad Energy AS and JBC Energy GmbH.
The campaign by OPEC and its allies to tighten supplies shored up global crude markets in 2019, pushing Brent prices up 23% despite a flood of new American shale oil and fragile fuel demand around the world. The coalition agreed early last month to deepen its curbs to prevent a new surplus forming in the first quarter.
The survey showed that Saudi Arabia, OPEC’s biggest member, is already making strides toward its new target. With 9.83 million barrels a day of production, the kingdom has cut more than twice the amount pledged under last year’s deal, and is well on its way to the new, self-imposed quota of 9.7 million barrels.
The U.A.E. also cut more than required under the expiring accord, trimming by 60,000 barrels a day to 3.04 million.
The performance of other nations has been less exemplary.
Iraq made a token gesture at fulfilling its commitments by curbing 60,000 barrels a day in December, but with an overall production rate of 4.65 million a day it’s only just down to the starting point for last year’s cutbacks. It will need to slash a further 180,000 barrels to meet its 2020 target.
Nigeria, which trimmed 30,000 barrels in December after repeated assurances it’ll adhere to its obligations, remains slightly higher than the baseline for its 2019 cuts.
Russia, the biggest producer in the OPEC+ alliance, has similarly shown a mixed performance. Its output of crude and condensate hit a post-Soviet high last year despite pledges to reduce, as Moscow proffered a succession of reasons why it couldn’t fully implement the agreed curbs.
Under the new agreement, which takes effect from this month, the 23 nations in the OPEC+ network have promised to extend their overall reductions by 500,000 barrels a day to 1.7 million, and the Saudis have pledged to go even further.
Whether or not Riyadh is satisfied with its partners’ progress will become clearer when the alliance holds its next meeting in early March.