Now entering their fourth year of production cuts to prop up the oil market, OPEC, Russia, and nine other countries agreed last month to deepen their cuts to 1.7 million b/d — of which OPEC would shoulder 1.2 million b/d — from January to March.
Oil prices yesterday dropped lower than the week’s opening price, as Brent slipped to $64.63 and WTI, $58.80 while Nigeria’s Bonny Light was $67.58 as at 4.27pm GMT.
Nigeria pumped 1.84 million b/d, according to the survey. That is 90,000 b/d above its 2020 quota, although Nigeria has insisted that some of its barrels should be counted as condensate, which is not subject to production restrictions under the deal.
The country had proposed 2.3 million barrels daily crude oil production for 2019, but output remains below target and above OPEC quota.
The 10 members with quotas under the accord, which exempts Iran, Libya, and Venezuela, produced 25.06 million b/d in December, making good on their new collective ceiling of 25.15 million b/d.
Despite the reduced output and concerns about supply disruptions because of escalating hostilities in the Middle East, OPEC officials have said the market is in no danger of a shortage and that they see no reason to reverse their cuts for now.
Indeed, many analysts continue to forecast a supply glut through the first half of the year and say additional production restraint from OPEC and its partners may be needed to prevent an oil price slump.
Saudi Arabia, OPEC’s largest producer by far, trimmed its production in December to 9.82 million b/d, according to the survey, after surging it in November to replenish stocks depleted in the wake of the September 14 attacks on the Abqaiq processing facility and Khurais oil field.
That is far below its quota of 10.31 million b/d under the deal that expired at the end of December, and also well under its new cap of 10.14 million b/d. Saudi Energy Minister, Prince Abdulaziz bin Salman, has pledged to hold the kingdom’s output at around 9.74 million b/d starting in 2020, as long as other members respect their quotas.
So far, however, Saudi over-compliance has been masking underperformance by others.
Iraq, which has consistently flouted its cap, scaled back its production to a nine-month low of 4.58 million b/d in December, the survey found. OPEC’s second-largest producer will need to cut an additional 120,000 b/d to meet its new target of 4.46 million b/d.
The UAE trimmed its output by 60,000 b/d to a 15-month low, while Libya experienced issues with its El Feel field, which dropped its production by 30,000 b/d. Sanctions-impaired Iran saw its production fall by the same amount, the survey found.
Those losses were more than enough to offset Angola’s 150,000 b/d rise in December, which was boosted by the return of key grade Girassol from maintenance.Venezuela, also under US sanctions, saw a modest 20,000 b/d rise as its crude exports rebounded, while Ecuador and the Republic of Congo saw similar gains, according to the survey.
December was Ecuador’s last month as an OPEC member, with its energy ministry January 2, confirming the country’s decision to exit the organisation due to financial needs that it said made further production cuts unpalatable. But sources close to Ecuador and OPEC told Platts that the two sides have been discussing a potential return.
Overall, OPEC’s compliance with its cuts was 158% for December, according to Platts’ calculations. Under the new quotas that went into force January 1, OPEC’s December production would result in 108% compliance.