14.3 C
New York
Saturday, October 23, 2021

OPEC Output Slides Again Amid Planned Cuts and U.S. Sanctions

OPEC Output Slides Again Amid Planned Cuts and U.S. Sanctions© Reuters. OPEC Output Slides Again Amid Planned Cuts and U.S. Sanctions

(Bloomberg) — OPEC’s crude production slumped again last month as the cartel implemented planned cutbacks in full and some members were hit by U.S. sanctions.

Saudi Arabia, Kuwait and the United Arab Emirates delivered all — and in some cases more — of the supply curbs they pledged to try to prevent a global glut. OPEC and its allies are embarking on a new round of cuts as record American shale output and fragile fuel demand put downward pressure on crude prices.

Still, almost half of the output drop was caused by unplanned losses in Venezuela and Iran, which are under trade restrictions imposed by President Donald Trump. The plunge shows that, despite Trump’s guidance this week that OPEC should “relax” instead of restraining supply, the group’s production is highly influenced by the president’s foreign policy.

Output from the 14 members of the Organization of Petroleum Exporting Countries fell by 560,000 barrels a day in February to 30.5 million a day, according to a Bloomberg survey of officials, analysts and ship-tracking data.

As a result, the 11 members involved in the agreement to rein in supply have implemented 108 percent of the reduction they announced late last year. Their output is broadly in line with the 30.6 million daily barrels the group estimates is needed this year, meaning that global markets should be in balance.

Saudi Arabian Energy Minister Khalid Al-Falih gently rebuffed Trump’s call to ease up on the strategy, saying in Riyadh on Feb. 27 that OPEC should continue to limit supply into the second half of the year. At about $66 a barrel, crude prices remain below the levels needed by the kingdom, and most other OPEC members, to cover government spending.

Venezuela, Iran

Nevertheless, about 250,000 barrels of February’s output reduction came from members exempt from the supply accord.

Venezuela suffered the biggest decline, losing 160,000 barrels a day to 1.07 million a day, the lowest since a labor strike virtually shut down the country’s production in 2003. The U.S., Venezuela’s biggest oil customer, is banning imports as Trump accuses President Nicolas Maduro of fraudulently clinging to power, and gives backing to Maduro’s political opponents.

Iran saw the next-biggest reduction, declining by 90,000 barrels a day to 2.65 million, the lowest since 2013. The U.S. re-imposed sanctions on Iran’s oil trade late last year after Trump abandoned an accord with the Islamic Republic relating to its nuclear program.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source: Investing.com

Related Articles

Stay Connected

10,836FansLike
12,893FollowersFollow
756FollowersFollow
- Advertisement -

Latest Articles

Popular Articles