OPEC oil output drops on Saudi cut, outages and sanctions.

Catogory : Market Report

OPEC oil supply has fallen in January by the largest amount in two years, as Saudi Arabia and its Gulf allies over-delivered on the group’s supply-cutting pact while Iran and Venezuela registered involuntary declines. The 14-member Organization of the Petroleum Exporting Countries has pumped 30.98 million barrels per day (bpd) this month, the survey showed on Thursday, down 890,000 bpd from December and the largest month-on-month drop since January 2017.

The survey suggests OPEC is almost three quarters of the way in delivering supply cuts that started on Jan. 1 in an effort to avert a glut, even though the group’s second-largest producer Iraq and some smaller members pumped above agreed levels.

An OPEC official said he hoped more members would deliver on their pledges and that the drop in supply so far was acceptable, calling it a “good start”. Crude oil has risen to $62 a barrel after a dip below $50 in December, boosted by the Saudi cuts, a host of involuntary curbs in other OPEC countries and the prospect of lower supply from Venezuela after U.S. President Donald Trump this week imposed sanctions on its oil industry. OPEC, Russia and other non-members – an alliance known as OPEC+ – agreed in December to reduce supply by 1.2 million bpd from Jan. 1. OPEC’s share of the cut is 800,000 bpd, to be delivered by 11 members – all except Iran and Venezuela. In January the 11 OPEC members bound by the supply-limiting agreement achieved 70 percent of the pledged cuts, the survey found. Further declines in Iran and Venezuela boosted the total OPEC decline to 890,000 bpd.