Saudi Arabia: Oil prices continue to climb on OPEC+ production cuts
March 3, 2019
Oil prices continued to recover in February as the oil production cuts implemented by OPEC and key non-OPEC members continue to tighten global oil markets. On 1 March, the OPEC oil basket traded at USD 65.3 per barrel, a 7.2% increase from the same day in February. The price was up 26.7% from the start of the year and was 5.0% higher than on the same day in 2018.
OPEC and other key producers such as Russia, jointly named OPEC+, continue to voluntarily cut oil production, thus reducing global oil supply. In January, for example, OPEC countries had nearly removed their share of the oil production cut from the market, amounting to 812,000 barrels per day. Russia, however, is clearly lagging behind, which has drawn criticism from Saudi Arabia’s Energy Minister Khalid al-Falih. Despite a short-lived drop in oil prices by the end of February following President Trump’s warning to Saudi Arabia that oil prices were “getting too high”, oil prices continued their upward trend in the final days of the month. Particularly, this followed news that Saudi Arabia was leaning towards an extension of the OPEC+ production cuts after the June deadline. Moreover, oil prices received additional support on 27 February when a report from the U.S. Energy Information Administration (EIA) for the week ending 22 February showed a sharp decline in oil inventories in the United States.
Combined crude oil output among OPEC members declined by 797,000 barrels per day month-on-month to 30.81 mbpd in January, according to the cartel’s latest monthly report. The reading mainly reflected much lower output in Saudi Arabia (January: 10.21 mbpd; December: 10.56 mbpd), as well as in Angola, Kuwait and the UAE.