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Oil production in the UAE, as well as in Saudi Arabia and Kuwait, surged to new highs in April, ahead of the start of a new deal to take millions of barrels of crude offline amid plummeting demand.
The Gulf states, who are part of the Organisation of the Petroleum Exporting Countries (OPEC) have much cutting to do, with their output, combined with those of the other members of the bloc, reached 30.79 million barrels per day (b/d) last month, according to the latest S&P Global Platts survey.
OPEC, Russia and other countries have recently agreed to trim production levels by 10 million barrels a day starting May 1 until June 30 this year. They also agreed to cut production by 8 million barrels a day for July to December 2020.
However, without any quotas enforced last month, the core Gulf OPEC members Saudi Arabia, UAE and Kuwait hit record highs in oil output, more than offsetting the losses posted by other producers like Iraq, Angola and Iran, Platts’ survey found.
According to the latest data, the UAE pumped 3.84 million b/d of crude in April, up by 0.39 percent from March, boosted by the return of its refinery in Ruwais from maintenance. “It will have to rein its production to 2.45 million b/d to comply with its new cap,” it said in a note.
As for Saudi Arabia, which topped the production charts for the previous month, overall output reached 11.7 million barrels a day, up nearly 2 percent from March. The country needs to shed its output by 3.21 million barrels a day to meet the new quota under the OPEC + deal.
Kuwait, for its part, produced 3.15 million barrels a day last month and needs to cut daily output levels by 980,000 b/d.
“[With the OPEC + coalition of OPEC, Russia and nine other allies agreeing to implement the biggest coordinated production cut in the market’s history starting in May, members will have to tighten up their discipline,” Platts pointed out.
Earlier in March, Saudi Arabia and Russia failed to reach a deal on oil production cuts, sparking a price war between the two oil kingpins. Oil prices nosedived to their lowest level in 20 years as a result.
The outlook for oil worsened after the failed deal, with most of the world in lockdown due to the coronavirus. It was only in early April when a new OPEC + deal was reached.
Oil prices have rebounded in recent weeks, and representatives of the OPEC+ members are due to meet again via webinar next month to review the market, as well as quota compliance.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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