OPEC slashed oil production last month as the group kicks off plan to boost sagging prices

OPEC+ scaled back oil output by 490,000 barrels a day last month, Bloomberg reported, with half of the cut coming from Iraq and Kuwait.

• OPEC+ scaled back production by more than 400,000 barrels a day last month to boost prices
• Half of the reduction in output came from Iraq and Kuwait, with a quarter from Libya, per Bloomberg.
• Global oil supply set to surge by 1.5 million barrels a day this year. 

OPEC and its allies began to pare back oil production last month, following through with plans to curtail output in order to boost slumping global crude prices. 

Bloomberg reported on Thursday that a survey of shipping data, estimates from officials, and information from energy consulting firms showed that OPEC+ scaled back output by 490,000 barrels a day last month, to 26.57 million barrels, with half of that coming from Iraq and Kuwait.

While Iraq cut its daily output by 130,000 barrels, to reach 4.2 million barrels per day, the country remains about 200,000 barrels a day above its agreed upon production level. 

Planned cuts by OPEC member states weren't the only factor that drove down output, however.

Bloomberg notes that approximately 25% of the decline can be attributed to the chaos over the shutdown of Libya's biggest oil field. Cuts from OPEC ally Russia are also unclear, and the country has been shipping less oil but much larger quantities of other fuel exports. 

The International Energy Agency forecasts that global oil supply will rise by 1.5 million barrels a day this year, reaching a record 103.5 million barrels a day. That's in part thanks to previously unseen levels of production in the United States, Brazil, Guyana, and Canada, and supply growth this year will be dominated by output from non-OPEC+ countries. 

Mounting geopolitical tensions in the Middle East are unsettling markets as 2024 begins. Houthi militants have struck cargo ships carrying energy commodities and other goods in recent months in retaliation for Israel's bombing campaign against Hamas in Gaza. 

Military airstrikes by the US and UK on Houthi targets in Yemen have not stopped the missile and drone strikes on commercial vessels, and many large companies are opting for much longer routes rather than risk sailing through the Red Sea to get to the Suez Canal. The disruptions have diverted so much cargo and energy supply that experts fear the increased shipping costs will ultimately lead to another bout of global inflation sometime in 2024. 

On Thursday, Brent crude, the international oil benchmark, was down 2% to $78.89 per barrel. West Texas Intermediate crude fell 2.4% to $74.03 a barrel.