Oil production in the Middle East declined by 250,000 barrels per day in 2017 with the biggest drop in eight years coming coming from Saudi Arabia, Kuwait and the UAE, according to BP's Statistical Review of World Energy.
Much of the decline has been a result of continued compliance undertaken by Saudi-led Opec as well as non-members led by Russia over the last year.
“The Vienna group had a target of 1.8 million bpd, but in practice the production cuts have far exceeded that with cuts totalling nearly 2.5 million bpd,” Spencer Dale, BP’s chief economist said at a press briefing in London.
Vienna-based Opec and its partners in the global oil pact have cut production since January last year and extended the agreement till the end of this year. The curbs have help bring down oil inventories to below their five-year average, according to Opec, and helped shore up oil prices to touch a three-year high of $80 a barrel last month.
BP’s annual statistical review, which serves as a bellwether for the global energy industry, noted in its latest report that global oil production rose 600,000 bpd in 2017 below the 10-year average for the second consecutive year. Tight oil flowing from the US at an average of 690,000 bpd as well as revival of output from Libya at around 440,000 bpd were the largest increases. Opec members Saudi Arabia and Venezuelan production registered the largest declines of 450,000 bpd and 280,000 bpd respectively.
The Middle East, which accounts for 34 per cent of global oil production and 45 per cent of all crude oil exports, saw oil consumption increase by 1.4 per cent, which was below the ten year average. Growth largely came from an increase in consumption in Iran of around 5.4 per cent to 1.81 million bpd, while consumption in the region’s biggest exporter Saudi Arabia reached 3.91 million bpd - its biggest decline of 0.5 per cent since 1995.
Meanwhile, growth in oil output in the region saw biggest increases from Iran, which grew 8.2 per cent to reach 4.98 million bpd as well as Iraq, which grew 2.2 per cent over the last year to reach 4.52 million bpd in 2017.
Gas production in Iran, which has the largest reserves globally for the resource, increased 10.5 per cent, above the 10-year average of 6.3 per cent, to reach 223.9 billion cubic metres in 2017.
Gas fared better than oil in the Middle East, with overall regional production rising 4.9 per cent to reach 659.9 bcm, compared with 574 bcm in 2016.
Egypt, which BP includes as part of the African region, contributed to much of the growth from the continent, with output rising 22 per cent to reach 49 bcm, driven mainly by production coming online from its Zohr gas field in the Mediterranean. Iraq, which made several attempts to reduce flared gas emissions and revamp its power sector last year, saw the biggest increases in regional gas consumption, growing 21.2 per cent to reach 12 bcm. Gas production in the UAE meanwhile declined 0.2 per cent to reach 72.2 bcm.
Overall energy consumption in the region rose 3.4 per cent, below the 10-year average, driven largely by consumption of both oil and gas in Iran. Both fossil fuels accounted for 98 per cent of the regional energy mix and 95 per cent of power generation.