OPEC oil output drops to four-year low

Crude oil supply by the Organisation of Petroleum Exporting Countries fell to a four-year low in February, a Reuters survey found, as top exporter Saudi Arabia and its Gulf allies over-delivered on the group’s supply pact while Venezuelan output registered a further involuntary decline.

The drop of 300,000 barrels per day comes despite criticism from US President Donald Trump, who on Monday tweeted a call for the group to ease its efforts to boost prices, saying they were “getting too high”.On January 1, OPEC and its allies began new production cuts to avert a glut that could soften prices. Reuters reported OPEC sources as saying that the deal would go ahead despite Trump’s pressure.

The 14 OPEC members pumped 30.68 million bpd in February, the survey showed on Friday, the lowest OPEC total since 2015, according to Reuters surveys. January’s total of 30.98 million bpd was not revised.

Oil has risen to $66 per barrel after a dip below $50 in December, boosted by lower Saudi output, involuntary curbs in other OPEC countries and the prospect of lower supply from Venezuela after Trump imposed sanctions on its oil industry.

OPEC, Russia and other non-members — an alliance known as OPEC+ — agreed to reduce supply by 1.2 million bpd. OPEC’s share is 800,000 bpd, to be delivered by 11 members — all except Iran, Libya and Venezuela, which are exempt from cuts. In February, the 11 OPEC members bound by the deal achieved 101 per cent of pledged cuts, the survey found, up from 70 per cent in January. Among exempt producers, Venezuelan supply fell, while Iran managed to boost exports despite also being subject to US sanctions.

The latest OPEC+ deal came just months after the group agreed to pump more oil, which in turn partially unwound their original supply-limiting accord that took effect in 2017. The biggest drop in supply came from Saudi Arabia, OPEC’s biggest oil producer, which pumped 130,000 bpd less than in January, the survey showed.

Saudi supply had hit a record 11 million bpd in November, after Trump demanded more be pumped to curb rising prices and make up for losses from Iran. OPEC and the kingdom changed course as prices slid on the prospect of oversupply in 2019. The second-biggest drop occurred in Venezuela after the US imposed sanctions on state oil firm PDVSA in January, slowing exports. Output in the country, once a top three OPEC producer, has already been in decline for years due to economic collapse.

The survey showed Kuwait and the United Arab Emirates also delivered larger cuts than required under the deal, while Iraq, a laggard on compliance in the last round of cuts, reduced supply with southern and northern exports edging lower.

Production in Libya was little changed as unrest kept the country’s biggest oilfield, El Sharara, offline for a month. Iran managed a small boost in supply as some customers increased purchases due to waivers from US sanctions, according to tanker data and industry sources.

Nigeria trimmed output but is exceeding its OPEC target due to the start-up of Total’s Egina field. Small African producers Gabon and Congo are also pumping more than agreed levels, the survey found. Nigeria said the Egina field produces condensate, a type of light oil excluded from the OPEC cuts which only apply to crude. The Reuters survey included the field based on Total’s listing of it as a crude producer. Punch

Pix: OPEC headquarters, Geneva