Abu Dhabi National Oil Company (ADNOC) announced a planned reduction of 229,000 barrels per day (bpd) in its crude oil production for February 2024. The move comes amid adjustments related to OPEC+ and aims to align production flows with the targets set for the United Arab Emirates (UAE). However, observers believe that this measure will have a minor impact on the market.
Adjustment of production flows
The reduction will be applied to the four main categories of sour crude produced by ADNOC:
– Murban: -110,000 b/j
– Upper Zakum : -83 000 b/j
– The blend: -20,000 b/y
– Umm Lulu : -16 000 b/j
Despite this announced drop, sources close to ADNOC clarified that Murban’s total production in February could remain higher than that of January. These fluctuations reflect adjustments in monthly allocation plans, often influenced by operational and business priorities.
Context of reductions
These adjustments are based on production plans established before the OPEC+ meeting of December 5, 2023. At this meeting, it was decided to extend until April 2025 the maintenance of voluntary production reductions put in place earlier .
For the first quarter of 2025, production targets for the UAE stand at 2.912 million b/d, compared to an average of 3.020 million b/d for the same period in 2024. This includes a specific target of 2.972 million b/d /d for January and 3.02 million b/d for February. These adjustments are part of the gradual transition towards an increase in production quotas of 300,000 b/d from April 2025.
Limited impact on the market
According to Asian traders, these cuts should have a negligible impact on oil markets. Several factors support this analysis:
– A significant portion of Asian refineries will be taken out of service for maintenance during the first half of 2024.
– Oversupply persists in markets, particularly with unsold cargoes of Middle Eastern crude for the January loading cycle.
One trader explained that demand for February and March is expected to remain weak, particularly due to the end of the peak season. He also noted that refinery maintenance will help further reduce demand for crude cargoes in the near term.
ADNOC, which has not yet officially commented on this reduction, is expected to adjust its final allocations based on operational tolerances and specific shareholder requests.
Towards long-term stabilization
These adjustments reflect OPEC+’s ongoing efforts to stabilize the global oil market in the face of economic uncertainties and fluctuating demand. Traders and observers remain attentive to the implementation of the next stages of the UAE’s production plan, including the transition to higher production levels from April 2025.
