Output cuts by the Organization of Petroleum Exporting Countries (OPEC) have pushed crude output down to 30.86 million barrels per day, a plunge of 970,000 barrels per day from December, according to a Platts survey of industry officials, analysts and shipping data.
The cartel pumped the fewest barrels since March 2015 in January, the month-on-month fall was the biggest since December 2016, the survey found, with Saudi Arabia and the United Arab Emirates leading the group in production discipline, while Libya kept its largest oil field offline due to security risks.
Oil prices have recovered since December when they fell to a 15-month low, with Brent trading above $60/barrel this week. OPEC however, has acknowledged that many factors influencing oil prices remain outside of OPEC’s control, including geopolitics and trade disputes.
At the last OPEC meeting in Vienna, the members agreed to slash output by 812,000 barrels per day, with Russia and nine other non-OPEC allies committing to a cut of 383,000 barrels per day for the first six months of 2019. Venezuela, Iran and Libya were exempted from the deal, and those three countries contributed to 25 percent of OPEC’s production decline for January.
Nigeria produced 1.87 million barrels per day, a fall of 30,000 barrels per day from the previous month but output remains well above its quota of 1.69 million barrels per day. The country is expected to see its crude production rise by almost 20 percent due to the startup of the giant 200,000 barrels per day offshore Egina field, with exports to kick off this month.
OPEC’s kingpin, Saudi Arabia has backed up the strong words of its energy minister Khalid al-Falih, with January production falling to 10.21 million barrels per day. The UAE, which has recently emerged as OPEC’s third-largest producer, pumped 3.07 million barrels per day in January, down 180,000 barrels per day from December, in line with its quota.
Venezuelan crude production dropped 10,000 barrels per day to 1.16 million barrels per day in January as the country’s political crisis worsened, with key Western nations endorsing opposition leader Juan Guaido as the country’s legitimate president.
The Trump administration also announced sweeping sanctions on PDVSA, Venezuela’s state-owned oil company, which are aimed at cutting oil revenues for the regime of Venezuelan president Nicolas Maduro.
Sanctions-hit Iran saw its output fall to its lowest level in over six years to 2.72 million barrels per day, a fall of 80,000 barrels per day from the previous month. This drop took place despite a rise in its crude exports as key buyers like Japan and South Korea resumed buying of Iran’s oil under US sanction waivers.
Production in Libya plunged to 850,000 barrels per day, the lowest since July as its largest oil field Sharara remains shuttered since armed forces occupied it in early December. Iraq, OPEC’s second-largest producer, saw its output fall 40,000 barrels per day to 4.63 million barrels per day in January, on lower exports.