14/02/2017 05:39 AST
Saudi Arabia, the world’s largest crude exporter, told the Organization 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.
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 9.748 million bpd, according to a monthly report from OPEC released on Monday. Under the agreement, Saudi Arabia pledged to cut output to 10.058 million bpd.
OPEC and 11 non-OPEC producers agreed in December to cut output by nearly 1.8 million bpd to support market recovery and clear excess crude that left oil prices below $50 per barrel.
OPEC is 92 percent compliant with its pledge to reduce output by 1.2 million bpd, Kuwaiti Oil Minister Essam Al-Marzooq said Monday, adding that non-OPEC producers are 50 percent 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 percent,” 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 Feb. 10 that OPEC achieved the best compliance rate in its history at the outset of the accord.
Arab News
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