ADNOC to reduce Feb crude output by 229,000 b/d as part of delay to OPEC+ cut unwind

Middle East crude producer Abu Dhabi National Oil Co. informed equity holders this week of a 229,000 b/d reduction in February crude output, five traders with knowledge of the matter said Dec. 12, though the actual extent of the cuts could be much smaller on a month-on-month basis.

Sources said the figures are likely based on initial production plans prior to OPEC+'s most recent Dec. 5 meeting, before which the group planned to unwind additional voluntary output cuts of 2.2 million b/d over a year from January 2025.

The reduction will be shared across its four mainstay sour crude streams, the traders said. Murban production will be reduced by 110,000 b/d, Upper Zakum by 83,000 b/d, Das blend by 20,000 b/d and Umm Lulu by 16,000 b/d.

A source at one equity holder said that despite the 110,000 b/d reduction in Murban output, the grade's overall production in February will still be higher than that for January.

In addition to February, planned January Upper Zakum production also saw a slight reduction, while overall planned March production also saw some cuts, a separate source said.

ADNOC could not be reached for comment on the production cuts.

"Seems ADNOC cut production following OPEC+ announcements. The timing of it makes me think it's OPEC-related," one of the sources said.

OPEC+'s latest production plan from Dec. 5 showed a Q1 2025 production target of 2.912 million b/d for the UAE, down from an average of 3.020 million b/d for the same quarter following a Sept. 5 meeting, of which January was at 2.972 million b/d and February at 3.02 million b/d.

The gradual increase of 300,000 b/d in the UAE's baseline production will now start from April 2025.

One trader said it was likely only equity holders would be affected by any actual reduction in output. ADNOC released its February allocations to term supply holders at the end of November, with term holders noting no changes. Final volumes could still be subject to operational tolerance changes before the actual cargoes are loaded in February.

"February, they didn't cut anything. They could well just give us the minimum quantity, but we won't know until later," a second trader said.

Asian sour crude traders said any cuts by ADNOC at this point will have little impact on the market, owing to a sizeable chunk of refining capacity being taken offline for maintenance over the Q1-Q2 period, as well as an overhang of Middle East crude cargoes still left unsold from the January-loading cycle.

"Market isn't going to get better. The peak season is already over, and for February and March demand will be weaker; people will be going into turnaround," the second trader said.