Oil supplies from OPEC are plunging this month as the group implements production cuts aimed at erasing a global surplus, according to tanker-tracker Petro-Logistics SA.
The Organization of Petroleum Exporting Countries will reduce supply by 900,000 barrels a day in January, the first month of the accord’s implementation, said the Geneva-based consultant. That’s equivalent to about 75 percent of the cut that the producer group agreed. Eleven non-members led by Russia are to curb their output in support.
The data suggest “a high level of compliance thus far into the production curtailment agreement,” said Daniel Gerber, chief executive officer of Petro-Logistics, which has monitored tanker movements for more than three decades. The estimates are one of the first outside assessments of OPEC’s progress.
Adherence to the accord is “great,” Saudi Arabia Energy Minister Khalid Al-Falih said on Jan. 22 when countries met to discuss monitoring implementation. Some analysts, such as London-based consultants Energy Aspects Ltd., have expressed doubts that Iraq will deliver its share of the cuts as the country presses on with the rehabilitation of its oil industry after years of war and sanctions.
While oil prices initially rallied in the two weeks after OPEC announced the supply curbs on Nov. 30, the gains subsequently stalled amid uncertainty over how much of the cutbacks would be delivered. Brent crude futures traded at about $55 a barrel in London on Friday.
Recognizing the skepticism among oil traders, the organization took additional steps to prove it will honor its commitments.
OPEC nations Saudi Arabia, Kuwait, Algeria have said they’ve cut output this month by even more than was required, while Russia said it’s trimming production faster than was originally agreed. Saudi Arabia’s Al-Falih said on Jan. 22 that producers have fulfilled their obligations so faithfully that OPEC probably won’t need to extend the accord when it expires at the middle of the year.
Producers also set up a five-nation committee tasked with overseeing compliance, which will next meet in late March for a review of production data.
An implementation rate of 75 percent would be higher than the level OPEC typically achieved in the past. The best rate attained during its previous agreement, during the financial crisis of 2008, was 70 percent, according to Hasan Qabazard, OPEC’s former head of research.
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