Saudi Arabia has cut its crude output in January by about 400,000 barrels per day (bpd), according to two OPEC sources.
The sources, quoted by Reuters, said Riyadh told OPEC that the Kingdom pumped 10.24 million bpd in January, compared to 10.643 million bpd in December, representing a cut that was 70,000 bpd deeper than targeted under the OPEC-led pact to balance the market and support prices.
The OPEC+ alliance, which is formed of the Organization of the Petroleum Exporting Countries (OPEC), Russia and other non-OPEC producers, reached an agreement in December to reduce supply by 1.2 million bpd from Jan. 1.
Reuters said that while the agreement stipulated that Saudi Arabia should cut output to 10.311 million bpd, Energy Minister Khalid al-Falih has affirmed it would exceed the required reduction to demonstrate its commitment.
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Last month, the Saudi minister said his country would export 7.1 million bpd in February, down from 7.2 million bpd in January.
On Tuesday, the head of state-run Kuwait Petroleum Corp, Hashem Hashem, said that global oil supply could be hit in 2019 by big reductions in exports from Venezuela.
“One of the known risks of supply shortage in 2019 would include the continuing decline of Venezuelan crude oil production beyond current expectations,” he stated.
“However, the wild card recently has been market perceptions of potential shortages mainly from geopolitical pressures that have caused supply disruptions in the past, and therefore pose a real threat for 2019,” he added.
Hashem also pointed to the threat of a US-China trade war and mixed messages from the United States on whether it would raise interest rates, which he said will cause instability in the global equity markets and could increase oil price volatility this year.
While emphasizing that OPEC+ actions should help re-balance the oil markets this year, he warned of the impact of underinvestment in the oil industry which could cause a supply crisis by 2025.
“OPEC and the non-OPEC producing countries... have successfully provided stability to the market since 2017 and reduced volatility in oil prices. The resultant prices, are critical to stimulate investment and growth,” he said.
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