Opec cuts oil production as coalition begins new supply pact

ORGANIZATION of Petroleum Exporting Countries (Opec) cut oil production last month as the group and its allies began a new effort to prevent a global surplus and shore up prices.

Output from the Opec fell by 490,000 barrels a day (bpd) last month to 26.7 million bpd, according to a Bloomberg survey. About half the reduction came from Iraq and Kuwait.

Still, the group’s implementation of its fresh output cuts was not as strong as the headline figure change suggests.

About a quarter of the drop resulted from disruptions in Libya, which is not part of the planned cutbacks, and overall output remains several hundred thousand bpd above the collective limit as Iraq and the United Arab Emirates produce more than their quotas.

Led by Saudi Arabia, Opec and its allies pledged to make additional production curbs this quarter – on top of reductions made last year – as global oil demand growth slows and rival supplies, led by the US, continue to climb.

Oil markets remain fragile, with prices holding near US$80 a barrel in London even as conflict rages in the Middle East and shipping in the Red Sea comes under attack. Prices are lower than when Hamas launched its attack against Israel on Oct 7.

The survey shows that Kuwait and Algeria implemented their required reductions, cutting by 110,000 bpd and 50,000 bpd respectively.

Iraq made considerable progress, cutting by 130,000 bpd to pump about 4.2 million a day. That still left the country, which is under considerable financial pressure to bolster revenues, about 200,000 bpd above its agreed ceiling.

Libya’s production slumped by 120,000 bpd to around one million a day, following the closure of its biggest oil field by protests for several weeks.

SEE ALSO

Opec+ committee meeting keeps oil output policy unchanged

Testy times for Opec’s crude dominance

Implementation of the new curbs in the wider Opec+ coalition – which includes countries such as Russia and Kazakhstan – has been ambiguous.

Russia’s seaborne crude exports were down about 500,000 bpd from their May-June average in the first four weeks of January, more than meeting their Opec+ commitments, though this stemmed from winter storms at a key port.

Meanwhile, the country’s shipments of refined fuels – which are also subject to an Opec+ limit – surged to the highest in six months.

Key Opec+ nations held one of their regular online market reviews on Thursday (Feb 1), and made no changes to their strategy for this quarter.

The alliance plans to decide on extending the measures into the second quarter in early March. Riyadh has said a continuation is “absolutely” possible.

Bloomberg’s survey is based on ship-tracking data, information from officials and estimates from consultants, including Kpler, Rapidan Energy Group and Rystad Energy.

The survey figures exclude Angola, which quit Opec on Jan 1 after 16 years of membership, following a dispute over its quota. BLOOMBERG