The oil-producer alliance known as OPEC+ in January completed its first month of supply cuts after adjusting the terms of the pact late last year. The results are less than stellar. Just 10 out of 21 nations curbing output fully complied with the accord last month. Trend reports referring to Bloomberg.
Eleven members of the Organization of Petroleum Exporting Countries and 10 other nations are collectively trying to remove about 1.2 million barrels of daily production to bring the oil market in balance. OPEC compliance was 86 percent last month. while non-OPEC was just 25 percent. In most cases. the countries are using October 2018 as the starting point for their curbs.
OPEC and its partners implemented a slightly different version of their supply-cut agreement in 2017-2018. with new starting points and output targets. The OPEC+ nations have also changed somewhat during the last two years. See the expandable tables for historical data.
After months of not adhering to the pact. Saudi Arabia is back in the game. carrying more than half of OPEC’s agreed cuts. It’s pledged to cut even deeper next month. The revised accord provides a more accurate picture of compliance than the previous version. since OPEC members Iran. Libya and Venezuela are now exempt. Those nations inflated prior calculations due to large. involuntary supply losses.
Non-OPEC compliance has suffered in part because Kazakhstan last month boosted production. In addition. Russia—responsible for 60 percent of the non-OPEC cuts—is easing into its part of the bargain. with plans to reach its output target by May. That’s a bit slower than Saudi Arabia—which along with Russia is a co-leader of the alliance—would like. according to the kingdom’s energy minister. OPEC’s chief has called on all nations to do their part.
The OPEC+ alliance reset its pact after a price plunge last year. but the group continues to battle with record U.S. production. At the same time. the ongoing U.S.-China trade war and signs of a slowing global economy have clouded prospects for demand. OPEC and its partners have pledged to stick with their current bargain through June. At least half of them have more work to do.