Oil prices rise on OPEC's supply cuts and healthy demand

Khalid al Falih speaks during a news conference in Riyadh

Khalid al Falih speaks during a news conference in Riyadh

Saudi Arabia plans to cut its crude oil exports in April to below 7 million barrels per day (bpd), while keeping its output well below 10 million bpd, a Saudi official said on Monday, as the kingdom seeks to drain a supply glut and support oil prices.

USA oil output, including natural gas liquids and other hydrocarbons, will climb to 19.6 million bpd by 2024 from 15.5 million a year ago, the Paris-based agency said. Gross crude exports will double, leading to greater competition especially in the Asian market. "This follows spectacular growth of 2.2 mb/d in 2018", the organization said in a statement. In particular, Saudi Arabia's oil production in February fell to 10.136 million bpd, a Saudi industry source told Reuters on Friday, down from 10.24 million bpd in January. However, in a boost for the producers, the IEA does not see a peak in global demand yet.

"Annual gains will boost the U.S. to levels never seen in any country, in excess of maximum capacity in both Russian Federation and Saudi Arabia", said the IEA in its five-year.

A boom in USA oil supply due to shale oil has countered efforts by OPEC and its partners led by Russian Federation to restrain supplies.

USA crude exports will surpass shipments from Russian Federation and almost catches up to Saudi Arabia by 2024, diversifying global supplies, the IEA said.

Falih told Reuters on Sunday it would be too early to change a production curb pact agreed by the Organization of the Petroleum Exporting Countries and allies including Russian Federation before the group's meeting in June.

USA oil production could become less responsive to crude prices as major oil companies expand operations in the nation's shale fields, IEA officials said at the CERAWeek energy conference in Houston on Monday. "The second wave of shale production growth is coming".

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OPEC+ has pledged to cut 1.2 million barrels per day (bpd) in crude supply since the start of the year to tighten markets and prop up prices.

"The Saudis continue to take a proactive approach to get supply and demand in better balance", said Andrew Lipow, president of Lipow Oil Associates in Houston.

While the agency sees electric cars and other cutting-edge advances curbing demand for petrol around the world, it assumed that increasing petrochemical and jet fuel consumption will still demand that pumps operate vigorously.

OPEC, Russia and other producers, known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from January 1 for six months. The 2023 figure is up by just 600,000 bpd from this year and less than the previous forecast.

However, OPEC member Iraq, which failed to observe its commitment to the organization several times in the past, is set to reinforce its position as one of the world's top producers, according to the IEA.

"The increase will have to compensate for steep losses from Iran and Venezuela, as well as a still-fragile situation in Libya", the IEA said.

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