OPEC deepened compliance with an oil supply-cutting deal in December due to a further decline in Venezuelan output and extra cuts by Persian Gulf exporters, a Reuters survey found, showing strong commitment to the deal despite higher prices.
Adherence to the curbs rose to 128% from 125% in November, the survey found. For the first time since the deal took effect in January 2017, the UAE pumped below its OPEC target, joining Saudi Arabia and Kuwait, Reuters reported.
The Organization of Petroleum Exporting Countries is reducing output by about 1.2 million barrels per day as part of a deal with Russia and other non-OPEC producers. The pact will run until the end of 2018. Oil hit its highest since May 2015 this week, supported by falling inventories, strong demand and high OPEC compliance. Many producers, still suffering from a 2014 price collapse, are enjoying the rally and the extra revenues.
“We are all pleased about it,” one official in an OPEC country said of the early 2018 price rise.
The survey shows no sign of producers boosting output to cash in on higher prices or to replace the decline in Venezuela, where output is dropping amid an economic crisis.
In the past, waning compliance as oil prices rallied has reduced the effectiveness of OPEC accords.
Top exporter Saudi Arabia trimmed output by 60,000 bpd, according to sources in the survey who cited stable to lower exports and lower refinery processing, putting supply further below the kingdom’s OPEC target.
Production in Venezuela, where the oil industry is starved of funds due to a cash crunch, has fallen further below its OPEC target, the survey found. Both exports and refinery operations were lower in December. The UAE, the incoming OPEC president, has cut production further and delivered its highest adherence yet, according to Reuters surveys. The UAE was a laggard on compliance for most of 2017, compared to peers like Saudi Arabia.
“The UAE has the OPEC presidency this year and they feel they should try to do better,” said an industry source who has discussed the issue with OPEC officials.
Libyan output slipped by 30,000 bpd, hampered by damage to a pipeline in a suspected attack and other outages.
Among countries with higher output, the biggest rise came from Nigeria, whose exports in December were set to reach a 21-month high, although actual shipments fell short of that level.