Saudi Arabia reportedly cut output by more than 400,000 bpd in December 2018
The OPEC nation cut production ahead of the start of agreed upon production cuts which were slated for January 2019
Saudi Arabia reportedly cut its crude production by more than 400,000 barrels per day (bpd) in December 2018. Bloomberg reported that Saudi crude production sat at 10.65 million bpd (mbpd) that month, down from 11.07 mbpd in November.
Saudi Arabia's oil minister, Khalid al-Falih said in December that the country would pump 10.2 mbpd in January, less than the 10.3 mbpd agreed upon at OPEC's December meeting; Saudi Arabia plans to cut an additionally 100,000 bpd from its output.
Bloomberg's crude export data showed that Saudi exports to the US faced the biggest drop, with a 60% decrease in December to just over 350,000 bpd. In November, it exported more than 800,000 bpd to the US.
At its early December meeting, OPEC and allies agreed to cut production by 1.2 mbpd in 2019. OPEC member nations will cut production by 800,000 bpd, mostly shouldered by Saudi Arabia, while allies will cut production by 400,000 bpd. Libya, Venezuela and Iran are exempt from cuts.
US President Donald Trump has been critical of OPEC, urging the organisation to avoid production cuts ahead of its meeting in Vienna. Oil prices are a key point for US voters, and Trump wants to keep them low despite growing US shale production.
Although Trump would like to see lower oil prices, analysts have noted that low prices could ultimately hurt the US, which has ramped up its production; shale production in the Permian region faced bottlenecks, with logistics, transportation and workforce issues, and requires further investment from operators. A surge of supply from US producers was one factor in the recent drop in oil prices, as well as the country's issuance of eight waivers surrounding sanctions against Iran.
Meanwhile, Russian Energy Minister Alexander Novak, who ultimately agreed to production cuts, noted that OPEC should continue to monitor the market in early 2018.
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