OPEC’s crude oil production fell to the lowest in more than ten years last month as a number of producers cut more deeply than they had agreed to and Libya’s output continues to fall amid the oil port blockade, a Reuters survey has shown.
At 27.84 million bpd, the cartel’s February average was 510,000 bpd lower than the January average, with Libya’s production at a little over 120,000 bpd, down from over 1.2 million bpd at the start of the year. Only Iraq and Nigeria pumped more oil than they had agreed to, but this still kept production cut compliance levels above 100 percent, at 128 percent.
Just days before the meeting of OPEC and its partners in Vienna, sources from the organization said OPEC was discussing even deeper cuts, adding another 1 million to the current cuts of 1.7 million bpd, up from an earlier proposal to deepen the cuts by 600,000 bpd.
Also, the group could go ahead and deepen the cuts even if Russia decides to sit this round out, the sources, who spoke to Reuters earlier this week, said.
“Saudi Arabia wants to hold prices from falling, but Russia is still not agreeing. So the only way might be for OPEC to cut alone, which will not send a good signal to the market,” one source said, while another added, “There should be a cut, there is no other option.”
OPEC has been desperately looking for a way to stop the oil price decline or at least slow it down, after the coronavirus outbreak in China pressured oil prices into a bear market, with Brent and WTI falling to the lowest since the 2008 financial crisis last week. This week, the benchmarks recouped some of their losses largely on expectations of OPEC to announce deeper production cuts.
By Irina Slav for Oilprice.com
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President Putin who has a great grasp of the global oil market spoke yesterday of the futility of any cuts while the outbreak is raging.
Moreover, OPEC should be very weary of calls by the likes of the International Energy (IEA) for it to deepen the cuts. These calls aren’t motivated by their care for the welfare of OPEC members but by their own political agenda. For them, cutting more of OPEC’s production will lead to a reduction of its share in the global oil market and a weakening of its influence.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London