Saudi Arabia Says It Cut Oil Output by Most in 8 Years

Saudi Arabia told OPEC that it cut oil production by the most in more than eight years, going beyond its obligations under a deal to balance world markets.

The kingdom reported that it reduced output by 717,600 barrels a day last month to 9.748 million a day, according to a monthly report from the Organization of Petroleum Exporting Countries, Bloomberg reported.

The group’s own analysts, who compile data from external sources, estimated that Saudi Arabia made a smaller 496,000 barrel-a-day cut, in line with last year’s supply agreement.

“OPEC has done particularly well, they’ve surprised most analysts,” Spencer Welch, director of oil markets and downstream at IHS Markit, said in a Bloomberg radio interview before the report was published. “Saudi Arabia has made a particular effort to boost compliance.”

OPEC and Russia are leading a push by global producers to end a three-year oil surplus that sent prices crashing and battered their economies. OPEC agreed in November to reduce production to 32.5 million barrels a day with non-members to contribute an additional 0.6 million bpd to the cuts.

While prices initially rallied 20% in the weeks after OPEC’s Nov. 30 agreement, the gains have since faltered on concern that rebounding US output will fill the gap left by the OPEC cuts.

Saudi Arabia’s data indicate it is pumping about 310,000 barrels a day below its specified target. Saudi Arabian Energy Minister Khalid al-Falih had said on Dec. 10 that the kingdom was willing to cut even more than was required to demonstrate its commitment to the accord. In the same monthly report, Iraq, Venezuela and Iran told the organization they pumped more than allowed by the accord.

Iraq’s own data show that it is exceeding its target by about 279,000 barrels a day, Venezuela’s show a surplus of 278,000 and Iran’s of 123,000 a day, according to the report.

OPEC's secondary sources estimates indicate that the group has fulfilled more than 90% of the planned cuts. OPEC's output fell by 890,200 bpd from a month earlier to 32.139 million in January, the data show.