Opec's crude oil production fell 1 million barrels per day to 32 million barrels per day last month, the International Energy Agency (IEA) said in a report today. That equates to roughly 90% compliance with their plans to cut production.
The plans for Opec and 11 non-Opec producers to cut a total of 1.8 million barrels per day of production and swollen tanker supply are pushing down freight rates for dirty tankers.
The Baltic Exchange assessed average VLCC rates at around $22,000 per day with suezmaxes earning just over $10,000 per day.
During a panel discussion in New York on world oil markets, Poten & Partners broker George Belesis noted the production cuts are "having an adverse effect on freight markets."
Opec's largest producer, Saudi Arabia, is making the largest cuts, reaching 560,000 barrels per day compared to a target cut of 490,000 barrels per day. Qatar and Angola were also singled out for achieving higher cuts to output than initially targeted.
On the other end Venezuela and the UAE remain well under their targeted cuts.
Libya, which is exempt from the cuts, boosted output. But Nigeria, which is also exempt, continues to struggle with production increases due to ongoing force majueres.
Russia, the largest non-Opec producer to agree to the cuts, only managed to trim output 100,000 barrels per day, one-third of its committed cut. But Russia says it will implement cuts over time.
But The IEA raised its overall forecast for non-Opec production citing increased output from Brazil, Canada and the US, which are expected to add another 750,000 barrels of production this year.
