Kuwait joins OPEC peers with deeper oil supply cuts

Kuwait will deepen oil supply curbs to its main customers in Asia later this month, refiner sources said on Tuesday, as the Gulf producer joins bigger OPEC peers in cutting back output to put a firmer floor beneath prices.

State oil firm Kuwait Petroleum Company notified at least three Asian lifters that it will cut term crude oil allocations loading from Jan. 22 by 5 percent, sources told Reuters on condition of anonymity because the information isn’t public.
KPC also told the Asian lifters that it would continue to disallow customers to utilise “operational tolerance” on cargoes to load up to 5 percent above term volumes on each cargo, a ban it first imposed in late December, the sources added.

The measures add to growing evidence that OPEC’s biggest members are visibly tightening the taps after the cartel agreed last month to cut production by a record 2.2 million barrels per day (bpd), taking their total curbs since September to 4.2 million bpd, the equivalent of 5 percent of global oil supply.

Expectations of good OPEC compliance with the cuts, coupled with violence in Gaza and the Russian gas dispute, have helped lift oil prices from a low of near $32 a barrel in mid-December to just below $49 a barrel on Tuesday.[O/R]

The combination of a reduction in term supply volume as well as the elimination of the upside tolerance are the strictest limits that Kuwait has imposed since OPEC began cutting output, clearing the air after a series of confusing signals.

Guardian