According to a Bloomberg survey, OPEC’s output fell by 120,000 barrels per day (bpd) to 27.05 million bpd, with the UAE contributing the majority of the reduction. This decline was partially offset by modest production gains in Libya and Nigeria, while Iran and Kuwait recorded slight decreases.
Sustained Efforts to Bolster Oil Prices
For several years, OPEC and its allies, led by Saudi Arabia, have been curbing crude production to support oil prices amid weak global demand and abundant US supplies. In December, the OPEC+ coalition once again deferred plans to reinstate previously halted output.
However, adherence to production limits remains uneven across member states. While OPEC data shows that the UAE is largely compliant with its quota, independent estimates, including Bloomberg’s survey, suggest the country may still be producing above its agreed limit.
In December, the UAE took significant steps to demonstrate its commitment to the coalition’s objectives, reducing oil exports to an 18-month low. Data from tanker tracking shows state-run ADNOC has further tightened allocations of crude shipments to some Asian customers for January and February.
Adjustments to UAE Production Plans
As part of its dedication to OPEC+ goals, the UAE postponed an agreed increase of 300,000 bpd in additional production. Initially planned to begin in January, the ramp-up will now start in April and be distributed over a longer period. Despite these measures, the survey indicates the UAE’s December production stood at approximately 3.2 million bpd, several hundred thousand barrels above its official limit.
Market Outlook
Oil markets began the new year on a strong footing, with prices reaching a three-month high above $77 per barrel in London on Monday. This surge was attributed to tightening Middle Eastern markets and cold winter conditions.
Yet, analysts remain cautious about sustained price increases. The International Energy Agency (IEA) projects a global oil surplus of at least 1 million bpd in 2025, fueled by slowing demand growth in China and robust output from the US, Guyana, and Canada.
Political developments may also reshape the market landscape. The incoming US administration has signaled intentions to reimpose stringent sanctions on Iran, targeting its oil exports. These measures could curtail flows to key markets like China, Tehran’s largest customer, though analysts, including Goldman Sachs, predict only a modest impact on overall production.
Shifts in OPEC Member Production
The survey highlighted fluctuations in production across OPEC member states. Iran’s output declined by 40,000 bpd to 3.32 million bpd in December but remains near its highest levels since US sanctions were last intensified. Libya continued its recovery from recent political turmoil, adding 40,000 bpd to reach 1.23 million bpd, the highest in over a decade. Meanwhile, Nigeria saw a 40,000 bpd increase, bringing its production to 1.51 million bpd, supported by new field developments.
