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Kuwaiti officials say the OPEC-member country has reduced oil production this month to around 2.707 million barrels per day, in line with the targeted amount under the OPEC output cut agreement reached on 30 November.
So far, Saudi Arabia, Kuwait, Iraq and Venezuela are honoring the commitment to cut output, while Iran uses the time to shore up lost market share, and Libya and Nigeria struggle to ramp up production to avoid destabilization.
Kuwait agreed in November to cut output by 131,000 barrels per day, starting on 1 January. This figure is down from its October baseline production of 2.838 million barrels per day, and down from December’s 2.9 million bpd in production, news agencies cited industry sources as saying.
On 21 and 22 January, a committee responsible for monitoring whether the agreed upon cuts are being made will meet in Vienna to hash out a way to monitor compliance with the deal.
On Sunday, OPEC Secretary General Mohammad Barkindo is set to visit Kuwait for preliminary discussions with the Kuwait Oil Minister regarding mechanisms for monitoring compliance.
Meanwhile, Kuwait is benefitting from a slight recovery in oil prices since the November OPEC deal. For the second quarter in a row, Kuwait’s trade surplus has widened on oil price recovery, though its US$4.58-billion surplus is still far below the levels it had seen prior to the oil price crash of mid-2014.
"We expect the surplus to continue to improve as oil earnings continue to edge higher against a backdrop of recovering oil prices. The average oil price continued to trend upwards in 4Q16, and is set to continue to do so in the months ahead, especially following the announced production cuts by Opec and non-Opec producers," reads a National Bank of Kuwait report.
Earlier on Friday, S&P Platts Global said it expected the oil output agreement would help draw down the global inventory build by the third quarter of this year, assuming all parties to the deal comply with their commitments.
By Charles Kennedy From Oilprice.com
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Charles is a writer for Oilprice.com