OPEC’s production dropped to a four-year low in February, helped by Saudi Arabia and its Arab Gulf allies overachieving in their shares of the cuts, the monthly Reuters survey showed on Friday.
According to the survey tracking supply to the market and based on shipping data and information provided by sources at oil companies, consulting firms, and OPEC, the cartel’s oil production in February 2019 fell by 300,000 bpd compared to January to stand at 30.68 million bpd—the lowest production level since February 2015, according to Reuters surveys.
Saudi Arabia has already signaled that it would further cut production to around 9.8 million bpd in March, some 500,000 bpd below its commitment in the OPEC+ deal. Saudi Arabia’s Energy Minister Khalid al-Falih said last month that Saudi Arabia would be also cutting its crude oil exports to near 6.9 million bpd in March, slashed from 8.2 million bpd just three months ago.
The eleven OPEC members bound by the production cut deal achieved compliance of 101 percent in February, the Reuters survey found, suggesting that the cartel’s largest producer and de facto leader Saudi Arabia slashed production by more than it had pledged in the agreement. Production in exempt member Venezuela further declined, while another exempted producer, Iran, managed to boost its exports compared to December, according to the survey.
Official figures by OPEC and its secondary sources in the Monthly Oil Market Report (MOMR) showed that total OPEC production in January—the start of the new cuts—dropped by 797,000 bpd to average 30.81 million bpd. Saudi Arabia slashed production by 350,000 bpd from December to 10.213 million bpd in January, and its Arab Gulf allies Kuwait and the United Arab Emirates (UAE) also cut output substantially. Production in Venezuela—exempted from the cuts along with Libya and Iran—plunged by another 59,000 bpd to stand at just 1.106 million bpd in January.
OPEC will release its figures for the February production on March 14.
By Tsvetana Paraskova for Oilprice.com
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In 2017 net demand for OPEC oil reach the peak of 32.90 mb/d. This fell to 31.61 mb/d in 2018, and OPEC expects it to fall to 30.59 mb/d.
I cannot reconcile how the CEO of Saudi Aramco asserts that peak demand is many decade away, when the more salient peak demand of OPEC oil looks to have happened two years ago. So Aramco must already deal with a post demand peak reality. Sure it could produce more if it wanted to, but that would only lead to lower oil prices which it does not want. That is exactly what post demand peak means. OPEC must continue to reduce production year after year for the foreseeable future because global demand is growing too slowly, slower than non-OPEC producers will increase their supply.
Peak demand has come early for OPEC.