Saudi Arabia, the world’s largest crude exporter, told the Organisation of the Petroleum Exporting Countries (OPEC) that it cut oil production to its lowest level in more than eight years, signaling its seriousness in supporting market recovery, according to Arab News.
The level of Saudi cuts in January shows that the Kingdom went beyond its obligations under a deal to balance world markets that it made last year with other producers.
The Kingdom reported that it reduced output by 717,600 barrels per day (bpd) last month to 9.748mn bpd, according to a monthly report from OPEC released this week. Under the agreement, Saudi Arabia pledged to cut output to 10.058mn bpd.
OPEC and 11 non-OPEC producers agreed in December to cut output by nearly 1.8mn bpd to support market recovery and clear excess crude that left oil prices below $50 per barrel.
OPEC is 92% compliant with its pledge to reduce output by 1.2mn bpd, Kuwaiti Oil Minister Essam Al-Marzooq said this week, adding that non-OPEC producers are 50% compliant with their pledge of 558,000 bpd.
Abdulsamad Al-Awadhi, a former representative for Kuwait in OPEC, told Arab News, “The same old scenario still exists: OPEC is still cutting more than non-OPEC.”
OPEC is still urging oil suppliers outside the group to fulfil their commitments to cut output, and crude prices will rise once producers demonstrate better compliance with the agreement to clear a global glut, said Al-Marzooq.
“At the time when producers signed the deal, the initial commitments were to gradually increase cuts until April and May, so we were expecting to see some producers not fulfilling the cuts 100%,” he added.
“We understand the circumstances, and in February we are talking to non-OPEC producers to raise their cuts according to their commitments.”
Other OPEC members, including Kuwait, are taking advantage of the deal to perform maintenance work on their fields.
Saudi Arabia has been performing planned work on its fields since December, but a source told Bloomberg in January that its cut is unrelated to the maintenance.
The United Arab Emirates (UAE), also an OPEC member, will meet its pledged level of cuts as an average over six months, said the country’s Energy Minister Suhail Al-Mazrouei.
The UAE expects to make deeper reductions when oilfield maintenance work starts in Abu Dhabi in late March or April, he added, without quantifying the nation’s current compliance with its pledged cuts.
The International Energy Agency (IEA) reported on February 10 that OPEC achieved the best compliance rate in its history at the outset of the accord.
