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OPEC crude production in December tumbled 630,000 b/d month on month, an S&P Global Platts survey of industry officials, analysts and shipping data showed Tuesday, but the organization still has much more cutting to do to reach its new quotas for 2019.
OPEC's 15 members pumped 32.43 million b/d in December, a six-month low, the survey found.
ICE Brent futures were trading up 2.18% at $58.58/b at 1717 GMT Tuesday and have bounced 16% from their 17-month low of $50.47/b on Christmas Eve, amid signs the market was oversold and strong signals from OPEC kingpin Saudi Arabia it was serious about cutting supply levels.
Saudi Arabia, whose energy minister, Khalid al-Falih, was a driving force behind the forging of the latest output cut agreement aimed at shoring up slumping oil prices, lowered its output by 401,000 b/d in December to 10.60 million b/d, according to the survey.
Falih has pledged that Saudi output in January would come in around 10.2 million b/d, compared with its 2019 quota of 10.31 million b/d.
Saudi Arabia is not the only OPEC member that would need to significantly slash output to become compliant with new quotas.
Stripping out Qatar, which exited OPEC at the end of 2018, and Iran, Libya and Venezuela, which were granted exemptions from the latest round of cuts, the remaining 11 members pumped 26.89 million b/d -- almost 1 million b/d above their collective deal ceiling of 25.94 million b/d, which went into effect January 1.
Iraq, OPEC's second largest producer, raised its output to 4.67 million b/d in December, the survey found, some 160,000 b/d above its new cap of 4.51 million b/d.
Iraq's oil ministry vowed last week to hold the country's output right at its quota level through the deal's six months.
The UAE pumped 3.25 million b/d in December, but will be required to hold production at 3.07 million b/d starting this month.
Nigeria was also far above its quota of 1.69 million b/d, with December output of 1.90 million b/d, though its officials say some of the country's crude should be categorized as condensate, which is not subject to production limits.
The quotas are part of OPEC's deal with 10 non-OPEC allies to cut a combined 1.2 million b/d of output compared with October's levels during the first half of 2019 to prevent a supply glut in a market with a lukewarm demand growth outlook.
OPEC committed to about two-thirds of the collective cuts, but left its most imperiled members exempted, which means any of their involuntary declines will not count toward compliance.
Sanctions-hit Iran continued to struggle to find buyers for its crude, forcing its output to drop to 2.80 million b/d, its lowest since January 2014, according to the survey.
Production in Libya, whose largest oil field, Sharara, shut down for much of December, fell to 970,000 b/d, the survey found.
Venezuela, in the throes of an economic crisis, managed to hold output steady at 1.17 million b/d.
OLD DEAL ENDS
The December figures close the books on the previous round of output cuts, which ran for 2017-18, and committed OPEC and its allies to a combined 1.8 million b/d of supply reductions.
That agreement imposed quotas on 13 OPEC members, exempting Libya and Nigeria.
For the entire two-year run, those 13 members achieved a collective compliance level of 123%, aided in large part by Venezuela's collapse. The country began the deal by pumping 2.01 million b/d in January 2017, but dropped 840,000 b/d in the two years, resulting in a 458% conformity level with its quota, according to Platts calculations.
Kingpin Saudi Arabia, after having exceeded its required cut for most of the deal, ended up with a two-year compliance level of just 86%, after ramping up its output over the last six months, including an all-time high of 11.02 million b/d in November.
Iraq was the least compliant OPEC member, achieving just 39% conformity. Its new quota for 2019, however, is some 160,000 b/d higher than its 2017-18 quota, which should be easier for the country to meet.
OPEC PRODUCTION (million b/d)
|COUNTRY||DECEMBER||CHANGE||NOVEMBER||2017-18 QUOTA||2019 QUOTA|
Congo joined OPEC in June, becoming the organization's 15th member. It was not given a quota under the 2017-18 deal.
Qatar has left OPEC, effective January 1
2019 output deal exempts Iran, Libya and Venezuela.
2017-18 output deal exempted Libya and Nigeria
The estimate for Iraq includes volumes from semi-autonomous Iraqi Kurdistan
The next OPEC meeting will be in April, but no date has been set
--Herman Wang, firstname.lastname@example.org
--Edited by Jonathan Dart, email@example.com