Saudi Surprise Will Accelerate Stock Draw

In an apparent effort to shame the rest of the OPEC+ countries into abiding by their agreed January production levels, Saudi Arabia announced on Tuesday that it would cut production by 1.0 million b/d for February and March. At the same time, Russia was granted a 65,000 b/d increase in February and another 65,000 b/d in March. Kazakhstan was also granted a small increase in both months.

If the rest of the OPEC+ countries stay roughly at January production levels, the Saudi move will have a notable impact on the draw down of global stocks. The charts below show the pace of the global stock draw without, and with, the 2-month Saudi production cut. After March, OPEC+ production is assumed to return to the plan agreed in April 2020, for the remainder of 2021.

As seen in the charts below, under this additional reduction in Saudi production, the global stock draw accelerates. For example, with the Saudi action, the surplus over December 2019 falls to or below 600 million barrels in March (right hand chart including Saudi cut) rather than in June (left hand chart excluding Saudi cut).

More from our team

Your Energy Questions Answered

Have a question about a specific topic?