Saudi Arabia's continued output discipline and Venezuela's struggles under US sanctions led OPEC's crude oil production in February modestly lower to 30.80 million b/d, an S&P Global Platts survey of industry officials, analysts and shipping data found.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
The figure is a 60,000 b/d drop from January and is OPEC's lowest output level since March 2015, when Gabon, Equatorial Guinea and Congo had yet to join the organization but Qatar was still a member.
Despite the fall, OPEC still has more cutting to do to fully comply with its supply accord that went into force in January. The 11 members with quotas under the deal achieved 79% of their committed cuts in February, and remain 170,000 b/d above their collective ceiling. This is a slight improvement on January's 76%, with Nigeria and Iraq producing far in excess of their cap, according to Platts calculations.
Venezuela and Iran, both under US sanctions, and Libya, where instability continues to impact output, are exempt from the deal.
The agreement, which runs through June, calls on OPEC and 10 non-OPEC allies, including major producer Russia, to cut a combined 1.2 million b/d in supplies to help shore up oil prices.
The February output figures will be reviewed by a six-country monitoring committee of the OPEC/non-OPEC coalition, which meets March 18 in Azerbaijan to discuss market conditions and assess compliance with the deal. The committee is co-chaired by Saudi Arabia and Russia.
LEADING BY EXAMPLE
Saudi Arabia, OPEC's largest producer, has made good on its pledge to lead the coalition by example, slashing its output to 10.15 million b/d in February, the survey found. That is 160,000 b/d below its quota of 10.31 million b/d and the kingdom's lowest output level since May 2018.
Energy minister Khalid al-Falih has signalled that the kingdom may go even lower in March, to 9.8 million b/d.
Venezuela, whose oil production has been declining for years due to underinvestment, technical problems and labor issues, pumped 1.10 million b/d in February, down 60,000 b/d month on month, as it has struggled to sell its crude since US sanctions were imposed in late January.
At the end of February, Venezuela had 10.8 million barrels of crude sitting dockside without a buyer. The country's output is down 910,000 b/d in two years and the lowest since an industry strike in late 2002 and early 2003, according to Platts survey data, with analysts projecting further erosion due to the sanctions.
Iran managed to keep production steady in February, at 2.72 million b/d, the survey found, as several buyers in the month took advantage of sanctions waivers the US granted to eight countries to purchase Iranian crude.
The waivers expire in May, and the Trump administration has not provided any indication whether they will be extended or amended.
Iraq produced 4.67 million b/d in February, according to the survey, 160,000 b/d above its quota.
The country has consistently lagged in compliance with its committed cap, both under the current deal and under the previous accord, which ran from 2017 to 2018. Iraqi officials have sought exemptions from the deal, saying their war-torn country needs oil revenues to rebuild from its devastating fight against the Islamic State. But other members have pressured the country -- largely to no avail -- to conform with its quota.
Nigeria, which was exempt from the previous deal but agreed to a quota under the current accord, pumped 1.88 million b/d in February, the survey found, 190,000 b/d above its cap.
The West African country has started production from new field Egina, though its oil minister has suggested that he may seek to have those barrels classified by OPEC as condensate, which is not subject to the quotas. Assays of the crude from the field, however, show an API gravity of 27.5, significantly heavier than typical condensates.
Nigeria also considers Agbami grade as a condensate, while S&P Global Platts and some other secondary sources used by OPEC to monitor production classify it as crude.
Libya, which this week lifted the force majeure at its 300,000 b/d Sharara field after almost three months, pumped 870,000 b/d in February, a slight rise from January, according to the survey.
The first cargoes of Sharara crude since production restarted are expected to be lifted this weekend.
OPEC PRODUCTION (in million b/d)
OPEC PRODUCTION VS ALLOCATIONS (in million b/d)
|Total for members with quotas||26.11||25.937||0.17|
Notes: Qatar left OPEC, effective January 1.
2019 output deal exempts Iran, Libya and Venezuela.
The estimate for Iraq includes volumes from semi-autonomous Iraqi Kurdistan.
The next OPEC meeting will be on April 17, with the OPEC/non-OPEC meeting due the next day.
The OPEC/non-OPEC JMMC will meet on March 18 in Baku, Azerbaijan.
-- Herman Wang, email@example.com
-- Eklavya Gupte, firstname.lastname@example.org
-- Edited by Alisdair Bowles, email@example.com
Turning tides: The future of fuel oil after IMO 2020
This report provides a thorough introduction to the IMO's sulfur cap on marine fuel, its impact on markets and what to expect from the new regulatory framework.Download the report