Source: Golden Ten Data

OPEC and its allies promised to cut production sharply this quarter to avoid global oil oversupply and support oil prices, but efforts by member states to deliver on production reduction promises have been inconsistent. Although Kuwait and Algeria quickly implemented their production targets, Iraq cut production far below the agreed amount.

According to a report released on Tuesday, Iraq cut production by 98,000 barrels per day in January, about one-third of the required production reduction. As for production quotas allocated by OPEC, Iraq's execution record is not perfect, and it faces tremendous financial pressure to maintain revenue. The country claims that it has fully complied with its commitments.

Disagreements over compliance with production cuts have exacerbated OPEC's challenge to balance the global oil market. OPEC has also raised its competitors' oil supply estimates by 150,000 b/d this year and next.

The OPEC Vienna-based secretariat stated in its report that “given the current market environment, continued efforts by OPEC and its allies remain critical to achieving balance and stability in the oil market.”

The price of Brent crude oil has remained around $80 per barrel so far this year, as sufficient supply from the US and other regions has allayed concerns about the Middle East conflict.

Saudi-led OPEC continues to forecast that, driven by China, global oil demand will “healthily” grow by 2.2 million barrels per day, reaching a record 104 million barrels per day this year.

“We are seeing positive signs of a good correction in parts of the global economy, particularly the US,” OPEC Secretary General Haytham Alghes said at a meeting in Dubai on Tuesday.

Not everyone shares this optimistic view.

Saudi Aramco CEO Amin Nasser said in Dhahran on Monday that demand growth is expected to slow sharply this year, but is still “strong” at 1.5 million barrels per day. Major energy traders such as Vitol Group (Vitol Group) and Gunvor Group Ltd. (Gunvor Group Ltd.) also expressed similar views.

International Energy Agency (IEA) executive director Fatih Birol (Fatih Birol) told Bloomberg TV on Tuesday that the agency expects global oil demand to grow by 1.2 million to 1.3 million b/d. This should keep crude oil at a “moderate price,” he said.

According to the OPEC report, production in the 12 member countries of the organization fell by 350,000 barrels per day in January. Nearly half of the reduction stemmed from pipeline disruptions in Libya, where the country was not bound by a voluntary production reduction agreement.

According to OPEC data, Iraq's daily production is 4.19 million barrels, which is about 190,000 barrels higher than its production target. The organization's estimates are based on average estimates from seven external agencies. Iraq's oil minister Hayyan Abdul Ghani (Hayyan Abdul Ghani) said on Monday that the country's daily production is no more than 4 million barrels.

The implementation of the new production cuts also remains unclear in the broader OPEC+ alliance, which includes producers such as Russia and Kazakhstan. Russia has raised fuel exports to a six-week high, only temporarily cutting crude oil exports due to the winter storm.

OPEC+ is currently reducing production voluntarily by around 2 million barrels per day, a measure that will continue until the end of the quarter. Saudi Arabia's energy minister said the production reduction agreement “definitely” can be extended, and delegates plan to decide whether to extend it in early March.

edit/lambor