OPEC’s supply accord commits its 11 participating members to 3% oil cuts: document

London — OPEC kingpin Saudi Arabia has pledged to lower its crude oil output to 10.311 million b/d — a 322,000 b/d cut from its October level — according to a breakdown of member quotas under the producer group’s supply accord obtained by S&P Global Platts. Iraq, OPEC’s second highest producer, will cut 141,000 b/d to reach an output level of 4.512 million b/d and the UAE will cut 96,000 b/d to average 3.072 million b/d, according to the document prepared by OPEC’s secretariat.

OPEC, Russia and nine other non-OPEC allies agreed earlier this month to a combined 1.2 million b/d supply reduction for the first six months of 2019 to shore up what many expect to be weakening market fundamentals ahead.

The document shows that OPEC will shoulder 812,000 b/d of those cuts, while the non-OPEC participants will cut 383,000 b/d.

Saudi energy minister Khalid al-Falih has already pledged that the kingdom’s production will fall to 10.2 million b/d in January, exceeding its commitment.

Russia, the largest non-OPEC participant, has previously said it committed to reduce its production gradually by 230,000 b/d. The document says Russia’s quota under the deal is 11.191 million b/d. Russian energy minister Alexander Novak said his country would lower its output by 50,000 to 60,000 b/d in January. The agreement exempts OPEC members Libya, Iran and Venezuela. For the other 11 OPEC countries, the cuts represent a 3.04% reduction from the baseline October levels, as determined by an average of six independent secondary sources, except for Kuwait, which was given a September benchmark due to bad weather that impacted its production in October.

The non-OPEC countries are also using October as their baseline, except for Azerbaijan, which is using September, and Kazakhstan, which is using November.

OPEC production allocations (million b/d)

COUNTRY REFERENCE LEVEL CUT AMOUNT NEW QUOTA
Algeria 1.057 0.032 1.025
Angola 1.528 0.047 1.481
Congo 0.325 0.010 0.315
Ecuador 0.524 0.016 0.508
Equatorial Guinea 0.127 0.004 0.123
Gabon 0.187 0.006 0.181
Iraq 4.653 0.141 4.512
Kuwait 2.809 0.085 2.724
Nigeria 1.738 0.053 1.685
Saudi Arabia 10.633 0.322 10.311
UAE 3.168 0.096 3.072
TOTAL 26.749 0.812 25.937
Notes:
Iran, Libya and Venezuela are exempted from the cuts
All reference levels are October 2018, except for Kuwait, which is September 2018

Non-OPEC production allocations (million b/d)

COUNTRY REFERENCE LEVEL CUT AMOUNT NEW QUOTA
Azerbaijan 0.796 0.020 0.776
Bahrain 0.227 0.005 0.222
Brunei 0.131 0.003 0.128
Kazakhstan 1.900 0.040 1.860
Malaysia 0.627 0.015 0.612
Mexico 2.017 0.040 1.977
Oman 0.995 0.025 0.970
Russia 11.421 0.230 11.191
Sudan 0.074 0.002 0.072
South Sudan 0.132 0.003 0.129
TOTAL 18.320 0.383 17.937
Notes:
All reference levels are October 2018, except for Azerbaijan, which is September 2018, and Kazakhstan, which is November 2018