OPEC’s oil output plunges as Saudis slash output

Heinz-Peter Bader | Reuters

Saudi Arabia’s Oil Minister Khalid al-Falih listens during a news conference after an OPEC meeting in Vienna, Austria, November 30, 2017.

Oil supplies from OPEC sank by half a million barrels a day in March, hitting a four-year low, as Saudi Arabia continued to slash output and Venezuela‘s production plunged amid ongoing economic crisis.

The monthly production decline amounts to roughly half a percent of global oil demand. The drop is greater than the total monthly output of four of OPEC’s 14 members.

The producer group, along with Russia and other nonmember countries, is trying to keep 1.2 million barrels per day off the market through June, following a collapse in crude prices at the end of 2018. The production curbs by the so-called OPEC+ alliance aim to drain oversupply from the oil market and boost prices.

OPEC’s output fell by 534,000 bpd in March to 30.02 million bpd, according to independent sources cited by the group in its monthly report. This year, supply from the group has fallen by more than 1.5 million bpd, helping to drive international Brent crude prices 30 percent higher.

The headline OPEC output was the lowest since February 2015, when the group pumped 29.97 million bpd, though its membership has changed several times since then.

Much of the March decline is due to Saudi Arabia’s willingness to aggressively cut production. In March, the Saudis took another 324,000 bpd off the market, bringing output to just under 9.8 million bpd and delivering on Energy Minister Khalid al-Falih’s vow to pump well below 10 million bpd.

Saudi output has now fallen by about 1.3 million bpd from its all-time high at 11.1 million in November, when the kingdom’s production surged to offset U.S. energy sanctions on OPEC-member Iran.

The terminal decline in Venezuelan output continues to help OPEC+ cut global oil supplies. Following a series of blackouts that disrupted oil operations, Venezuela’s production plunged by 289,000 bpd to 732,000 bpd in March.

Venezuela, already mired in a years-long economic crisis, is now grappling with U.S. sanctions against state-owned oil giant PDVSA and a political standoff between socialist leader Nicolas Maduro and opposition figure Juan Guaido.