Opec cuts crude production by almost 900,000 barrels a day

13 February 2017

Saudi Arabia produces below agreed levels while other countries miss targets

Opec figures show crude production by the 13-state exporter group dropped 890,200 barrels a day (b/d) between December 2016 and January 2017, as countries carried out production cuts agreed in November last year.

Opec countries produced 32.139 million b/d in January, compared with 33,029 million b/d in December 2016.

Saudi Arabia carried out the largest reduction, with output down 496,200 b/d to 9.946 million b/d, followed by Iraq (165,700 b/d), the UAE (159,300 b/d) and Kuwait (141,200 b/d).

Riyadh undercut its agreed production level by 112,000 b/d, but Iraq, Kuwait and the UAE appear to have produced above the levels agreed in Vienna on 30 November.

All Opec members reduced production from December levels with the exception of Iran, Libya and Nigeria, according to Opec estimates based on secondary sources.

Opec countries, along with some non-Opec oil exporters including Russia, agreed at the end of 2016 to reduce production to shore up prices amid a global oversupply in crude oil.

Oil prices got an immediate boost after Opec announced its supply cuts on 30 November 2016. Brent crude has stabilised in a range of $54-$58 a barrel in the months since early December, compared with an average of $43.74 in 2016.

Extending the agreement is an option, according to some Opec ministers. Qatar’s Energy Minister Mohammed al-Sada said last week at a news briefing in Doha that “it is too early to make a judgement”.

Iran’s Petroleum Minister Bijan Zanganeh said he believes the oil-exporting countries should go beyond the initial agreement. He stated that Saudi Arabia is planning to start talks on a possible extension, despite a previous statement by Saudi energy minister Khalid al-Falih that he does not expect the deal to be extended.

The US-based Energy Information Administration forecast in its February Short-Term Energy Outlook that Brent prices would average $54.54 a barrel in 2017 and $57.18 in 2018.

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