OPEC deal overfulfilled by 55%
The OPEC states reduced oil production by 534,000 barrels a day in March to 30.02 million barrels a day, mostly due to reduction in Saudi Arabia, Venezuela, Iraq and Iran, OPEC said in a report. Thus, the OPEC+ oil output cut deal was fulfilled by 155%.
Saudi Arabia's oil output has fallen by about 1.3 million bpd from its all-time high at 11.1 million in November. In March, the Saudis took another 324,000 bpd off the market, bringing output to just under 9.8 million bpd. Following a series of blackouts that disrupted oil operations, Venezuela’s production plunged by 289,000 bpd to 732,000 bpd in March, CNBC reported.
In turn, output from Iran has fallen from 3.33 million bpd to 2.71 million bpd due to U.S. sanctions.
The next biggest decline came from Iraq, which cut production by 126,000 bpd in March to just over 4.5 million barrels.
The declines were offset by Libya, where output surged by 196,000 bpd to nearly 1.1 million bpd.
OPEC, Russia and other non-member producers are reducing output by 1.2 million bpd from Jan. 1 for six months. The producers are due to meet on June 25-26 to decide whether to extend the pact.
A senior analyst of 'Uralsib', Alexei Kokin, speaking to Vestnik Kavkaza, noted Saudi Arabia reduced oil production so significantly, as it fulfilled its previous promises, He added that the contribution of other countries to the over-fulfillment of the deal was insignificant.
"The rest of the countries mostly comply with quotas, with the exception of Nigeria and Venezuela. At the same time, Saudi Arabia seeks to keep prices at levels close to $70 per barrel, and does everything it can, including voluntary refusal of certain volumes and over-fulfillment of obligations under the deal. In general, this is connected with the country's internal priorities, budget parameters and raising funds," Alexey Kokin noted.
The effect of Saudi Arabia's efforts in late March - early April was reinforced by other events. "The military conflict shaking Libya escalated recently, which potentially has a great importance for the market, because stopping the production of Libyan oil is a loss of 1 million barrels per day. Therefore, I do not exclude that the OPEC Ministerial Monitoring Committee may advise to increase production in May, since oil from Venezuela, Libya, perhaps Iran may leave the market, if the U.S. cancels sanction waivers for India and China. Then they might discuss output increases," the senior analyst of 'Uralsib' concluded.