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A technical committee monitoring the implementation of the OPEC/non-OPEC production cuts has found that the allies achieved an 83-percent compliance with the pledged reduction, four delegates told Reuters on Wednesday.
OPEC and a group of non-OPEC producers led by Russia decided in December to cut production by a total of 1.2 million bpd between January and June in a renewed effort to rebalance the market and drive oil prices up.
OPEC’s Monthly Oil Market Report (MOMR) showed last week that the cartel’s crude oil production dropped by 797,000 bpd from December 2018 to average 30.81 million bpd in January 2019. Saudi Arabia cut production by 350,000 bpd to 10.213 million bpd, below its 10.311 million bpd ceiling in the production cut pact. Saudi Arabia’s Arab Gulf allies Kuwait and the United Arab Emirates (UAE) also cut output substantially. Iraq reduced production by 43,000 bpd from December to 4.669 million bpd in January. This is still way above Iraq’s quota of 4.512 million bpd.
OPEC’s lower production in January was also helped by more than 50,000 bpd declines in each of Libya and Venezuela, which, however, are exempted from the cuts together with Iran.
Among non-OPEC nations, Russia is taking the lion’s share of the non-OPEC cuts and pledged to reduce production by 230,000 bpd from October’s 11.421 million bpd level, to 11.191 million bpd.
Moscow, however, has repeatedly said that due to weather and geological conditions in the cold Russian winter, it cannot cut its oil production too quickly.
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In mid-January, Khalid al-Falih, the energy minister of Saudi Arabia—the OPEC kingpin and key Russian ally in all OPEC/non-OPEC production policy deals since early 2017—had said that Russia was moving with the cuts “slower than I’d like.”
Referring to Russia’s share of the cuts, Russian Energy Minister Alexander Novak said last week that as of February 14, the country had reduced its production by 80,000 bpd-90,000 bpd from October’s levels.
Novak said last week that the Russian companies would be trying to accelerate the cuts to reach the target by April.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.