OPEC pared its crude oil production by 100,000 barrels per day in December 2019, the latest S&P Global Platts survey finds, putting the bloc under its new, more-stringent quotas a month early.
OPEC pumped 29.55 million bbl/d, according to the survey, with Saudi Arabia producing well below its cap and compliance laggards Iraq and Nigeria improving their discipline.
Now entering their fourth year of production cuts, OPEC, Russia and nine other countries agreed last month to deepen their cuts to 1.7 million bbl/d — of which OPEC would shoulder 1.2 million bbl/d — from January to March.
The 10 members with quotas under the accord, which exempts Iran, Libya and Venezuela, produced 25.06 million bbl/d in December 2019, making good on their new collective ceiling of 25.15 million bbl/d.
Despite the reduced output and concerns about supply disruptions because of escalating hostilities in the Middle East, OPEC officials have said the market is in no danger of a shortage and that they see no reason to reverse their cuts for now.
Many analysts continue to forecast a supply glut through the first half of the year and say OPEC and its partners may need to flex additional production restraint to prevent an oil price slump.
Saudi Arabia, OPEC's largest producer, trimmed its production in December 2019 to 9.82 million bbl/d, according to the survey, after surging it in November 2019 to replenish stocks depleted in the wake of the Sept. 14, 2019, attacks on the Abqaiq processing facility and Khurais oil field.
Saudi Arabia's December 2019 output was far below its quota of 10.31 million bbl/d under the deal that expired at the end of December 2019, and also well under its new cap of 10.14 million bbl/d. Saudi energy minister Prince Abdulaziz bin Salman has pledged to hold the kingdom's output at around 9.74 million bbl/d starting in 2020, as long as other members respect their quotas.
So far, however, Saudi overcompliance has been masking underperformance by others.
Iraq, which has consistently flouted its cap, scaled back its production to a nine-month low of 4.58 million bbl/d in December 2019, the survey found. OPEC's second-largest producer will need to cut an additional 120,000 bbl/d to meet its new target of 4.46 million bbl/d.
Nigeria, the other habitual quota buster, pumped 1.84 million bbl/d, according to the survey. That is 90,000 bbl/d above its 2020 quota, although Nigeria has insisted that some of its barrels should be counted as condensate, which is not subject to production restrictions under the deal.
The United Arab Emirates trimmed its output by 60,000 bbl/d to a 15-month low while Libya experienced issues with its El Feel field, which dropped its production by 30,000 bbl/d. Sanctions-impaired Iran saw its production fall by the same amount, the survey found.
The losses were more than enough to offset Angola's 150,000 bbl/d rise in December 2019, which was boosted by the return of key grade Girassol from maintenance.
Venezuela, also under U.S. sanctions, saw a modest 20,000 bbl/d rise as its crude exports rebounded, while Ecuador and the Republic of Congo saw similar gains, according to the survey.
December 2019 was Ecuador's last month as an OPEC member, with its energy ministry Jan. 2 confirming the country's decision to exit the organization due to fiscal needs that it said made further production cuts unpalatable. But sources close to Ecuador and OPEC told Platts that the two sides have been discussing a potential return.
Overall, OPEC's compliance with its cuts was 158% for December 2019, according to Platts' calculations. Under the new quotas that went into force Jan. 1, OPEC's December 2019 production would result in 108% compliance.
Herman Wang and Eklavya Gupte are reporters with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.