Output from Opec members bound by supply targets fell by 400,000 barrels per day in December, as the group more than complied with a deal to try to boost oil prices.

Supply from 11 exporters was expected to average 27.1 million bpd in December, down from about 27.5 million bpd in November. Supply is likely to decline further in January after Opec agreed earlier this December to curb production by an additional 2.2 million bpd from January 1.

Top world exporter Saudi Arabia and fellow Gulf producer the United Arab Emirates have led the cutback in December. Saudi Arabia was expected to lower output by 300,000 bpd to 8.2 million bpd. Output from the UAE was expected to be down 130,000 bpd at 2.2 million bpd.

There was little sign of supply curbs from Iran and Venezuela, which need relatively high prices to balance their budgets and are usually among the first in Opec to support measures likely to boost the cost of oil.

Iran, Opec’s second-largest producer, is forecast to increase supply by 170,000 bpd to 3.85 million bpd, while Venezuelan output is steady at 2.32 million bpd.

Output from Iraq, which is excluded from Opec’s agreements to limit supplies, is forecast to rise to 2.45 million bpd from 2.27 million bpd in November, as a result of higher exports from the north of the country. Including Iraq and Indonesia, Opec production in December was forecast to decline by about 200,000 bpd to 30.4 million bpd.

On December 30, oil fell below $39 a barrel, pressured by gloom over the outlook for the world economy, which outweighed tension in the Middle East. US crude was down at $38.81 a barrel, having earlier touched a session high of $40.39. London Brent fell 89 cents to $39.66.

Oil is heading for a loss of nearly 60 per cent this year, its biggest annual fall since futures began trading 25 years ago. It has dropped more than $100 from a record peak above $147 a barrel in July. Analysts said market sentiment was partly being led by the dollar and moves on stock markets.

The Organisation of Petroleum Exporting Countries has agreed its biggest ever production cut of 2.2 million barrels per day (bpd) to fight the oil market slide. The group has cut output three times in an effort to remove about five per cent of world supply.

Prices have fallen on evidence of Opec compliance with its biggest ever production cut agreed earlier in December to try to halt the market’s slide. Libya has told oil firms to curb output by 270,000 barrels per day from January 1, more than the reduction it needs to make under Opec’s agreement to cut output.

The Abu Dhabi National Oil Co, (Adnoc), the UAE’s main producer said it would cut January and February oil exports by much more than some refiners had expected.

Adnoc said it would continue to supply its customers of Murban crude with 15 per cent less than normal contractual supplies, as it did in December, while Upper Zakum supplies will be reduced by three per cent from the norm.

Adnoc later said in another statement that it would cut February Murban and Upper Zakum allocation by15 per cent, and reduce Lower Zakum and Umm Shaif allocations by 10 per cent each.

The allocations were among the first concrete examples that Opec exporters were implementing the Organisation of the Petroleum Exporting Countries’ December 17 deal to cut supplies by 2.2 million barrels per day.

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