Oman orders May-June crude oil output cuts
Non-Opec producer Oman has already instructed all operators and oil producers in the sultanate to cut crude oil output for two months beginning 1 May, in line with its commitments under yesterday's Opec+ production restraint agreement.
The Opec+ alliance, which brings together Opec's 13 members with 11 non-Opec producers led by Russia, signed off on a landmark two-year agreement late yesterday that will take a combined 9.7mn b/d off the market in May and June. The cuts will moderate to 7.7mn b/d in the second half of the year and to 5.8mn b/d from January 2021 to April 2022.
Production will be cut from each member's October 2018 baseline, apart from the Opec+ group's two de facto leaders Saudi Arabia and Russia, which will each have a 11mn b/d reference level.
Under the terms of the deal, Oman has committed to cap its crude oil production at around 680,000 b/d in May and June, down 200,000 b/d, from its 883,000 b/d baseline level.
Oman's condensate production will not be constrained by the deal, as per an exemption that several non-Opec producers, including Russia, negotiated at their meeting in December.
The ministry of oil and gas (MOG) said Oman's customers will be informed of this change tomorrow.
With condensate production currently "around 150,000 b/d," according to a source at the MOG, the move should theoretically cap Oman's total production at around 830,000 b/d in May and June.
In February, the last month for which the MOG has released data, production averaged 955,500 b/d crude oil and condensate.
Sources at the MOG told Argus last month that overall crude and condensate output would average close to the late level in March.
And prior to the start of discussions earlier this month that resulted in yesterday's Opec+ agreement, sources said Oman was preparing to ramp its total crude oil and condensate production back up to around 1mn b/d as the cooperation between Opec and its non-Opec allies looked to have come to an end.
Oman's production last exceeded 1mn b/d in November 2018, when the Opec+ group temporarily relaxed production restraints over fears that US sanctions on Iran's crude exports could result in a global supply shortage.
It is unclear whether Oman still plans to raise its overall production towards 1mn b/d this month given the existence of the new output restraint deal.
By Nader Itayim
source: Argus Media
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