Total OPEC oil production is likely to fall further by March. In spite of the -797kbd fall in production from OPEC on a month-on-month basis, there is still further room for supply cuts in the next two months, noted OCBC Bank in a research report. Not all members of OPEC have entirely complied with the Dec OPEC+ cuts, especially Iraq and Nigeria, which have overproduced by +157kbd and +107kbd respectively.
Saudi Arabia’s apparent commitment to the reduction in production is likely to exert pressure on these two nations to comply with the December deal in the months ahead. In the meantime, the nations that have been exempted from the OPEC deal – Libya, Iran and Venezuela – have also cut productions every month since October.
Iran’s oil production is likely to steady at about 2.4mbd after the U.S. sanctions, while Venezuela is likely to lose around 30kbd on its political standoff every month. Libya might cut oil production by about 75kbd on its Saraha oil field crises per month.
“Coupled with Saudi Arabia’s claim to reduce production by a further -400kbd in Mar, OPEC production by the end of Q1 could total just 29.9mbd – the lowest since May 2014. This sends out a potentially bullish signal to the market, assuming all members comply with its cuts”, added OCBC Bank.
