Abu Dhabi National Oil Company (ADNOC) on Tuesday said it would cut crude supplies by 3-5 percent across its three export grades to meet commitments under an OPEC deal to curb production, according to Reuters.
The move is among the first visible indicators that oil markets could be physically tighter next year as the Organization of the Petroleum Exporting Countries (OPEC) and other producers cut output to ease a supply glut and prop up prices.
OPEC on Nov. 30 announced its members would cut production by around 1.2 million barrels a day to 32.5 million barrels a day, effective Jan. 1, with Saudi Arabia accounting for 486,000 bpd curb from the total. Last week, non-OPEC members also agreed to production cuts of up to 558,000 bpd and of this, Russia will shoulder the bulk with a 300,000 bpd reduction.
In a notice to term lifters, ADNOC said it would reduce Murban and Upper Zakum crude supplies by 5 percent and would cut Das crude exports by 3 percent, Reuters said.
"In line with OPEC's latest decision to cut production, we regret to advise you that crude oil allocation for the month of January 2017 will be reduced," the producer said.
ADNOC's supply cuts will mostly hit Asia although they remain within operational tolerance limits of 5 percent. The contract clause allows either the seller or buyer to adjust actual oil loading volumes based on logistics.
ADNOC's production hit a record 3.1 million bpd in November, according to a Reuters survey. The producer's flagship crude is light sour Murban with an API gravity of about 40 degrees and its production is about 1.6 million bpd.
Besides state-controlled ADNOC, France's Total, South Korea's GS Energy and Korea National Oil Corporation (KNOC) and the Japan Oil Development Company (Jodco) are partners in producing onshore crude. Key Murban crude buyers are in Japan, South Korea, New Zealand and Thailand.
The UAE's main offshore oils are Upper Zakum and Das crude.
Upper Zakum, owned to 28 percent by U.S. oil major ExxonMobil and 12 percent Jodco, is a medium grade crude.
Das, a blend from the Umm Shaif and Lower Zakum oilfields, is a relatively light crude grade. Beyond ADNOC's 60 percent share, Britain's BP, France's Total and Japan's Jodco are also partners in producing Das crude.