Overall OPEC production fell in December according to a survey by Reuters, mostly due to a 400,000 barrel per day cut made by Saudi Arabia. Iran and Libya posted involuntary production declines. Reuters file photo by Ahmed Jadallah.
OPEC production down by 460,000 b/d in December
A survey by Reuters showed OPEC production fell last month by the largest amount in nearly two years. According to the news agency, Saudi Arabia, UAE, Iran and Libya all posted crude production declines in December amounting to 460,000 barrels per day.
OPEC production slid to 32.68 million b/d, the lowest since January 2017.
The production cuts came one month before OPEC and its OPEC+ allies were to officially begin another round supply limits agreed upon by participants in early December. The formal accord between OPEC and other participants, including Russia, took effect on Tuesday and will result in cuts of 1.2 million b/d.
The cartel called for the production cuts after oil prices fell from a four-year high in October of $86/barrel to $56/barrel in December.
More OPEC production cuts have not been ruled out, but officials are hoping oil prices will be supported by the agreed-upon cuts.
“Naturally, it will adjust from now on,” an OPEC delegate told Reuters, referring to the downward trend in production. “I hope the market will recover soon.”
The survey showed the biggest drop in OPEC production came from the Saudis who cut their output by 400,000 b/d. The decline comes one month after Saudi Arabia posted a record-high production result of 11 million b/d.
The kingdom along with Russia boosted their production after US President Donald Trump demanded more crude be pumped to curtail oil price increases.
The Trump administration sanctioned Iranian crude, which resulted in rising oil prices. But waivers from Washington for some of Iran’s biggest customers along with increased production from major producers and growing concerns over a slowing global economy have tanked oil prices.
Reuters reports that Saudi Arabia may cut even more of its production this month. The United Arab Emirates also cut back its production according to the survey. Libya posted the third largest decline after unrest closed the north African nation’s biggest oil field.
Iran’s crude output also fell in December due to US sanctions. However, Reuters reports that Iran has maintained its exports, mostly due to sanctions waivers as well as determined efforts by Tehran to keep selling its crude.
Iraq bucked the trend and posted production increases after the restart of Kirkuk oil exports and a rebound in exports from southern terminals. Kuwait and Nigeria also reported increased crude production.
By 3:26 p.m., EST, benchmark Brent crude prices were up 89 cents to $55.80/barrel and US West Texas Intermediate crude prices had risen 42 cents to $46.96/barrel.