Non-OPEC members continue to produce despite deal to slash output

… Cut production levels by 65% last month.

Eleven non-OPEC members that are part of a global deal to cut output in order to increase prices made good on 65% of the promised cuts in February, sources told Reuters. However, the figure is still behind the greater cuts made by OPEC itself.

OPEC and non-OPEC members agreed to slash production by 1.8 million barrels per day beginning Jan. 1 of this year. Non-member Russia is planning to increase its compliance with the agreement by announcing it will cut the full amount it promised by the end of April. Russia pledged to eliminate a total of 300,000 bpd.

This coupled with the latest decision by Saudi Arabia appears to be making the OPEC’s oil production alliance to be on shaky ground.

Bin Salman, the new face of Saudi Arabia who is the draftsman of a plan to reform the kingdom and diversify away from oil. He is also seen as a key figure backing the deal between OPEC members and non-members like Russia to curb production and stabilise the market price.

Analysts say while it appears to be frayed, there is a good chance OPEC and its partners will ultimately keep their deal intact and extend it, because oil in the low $40s per barrel would strain the budgets of producing nations and make it much more difficult for the types of reforms that the deputy crown prince is trying to achieve.

OPEC members have said they would assess extending the agreement to cut 1.8 million barrels in production when they meet in May.

He also said OPEC was more aligned than ever and said Saudi Arabia was producing below the key psychological 10 million barrels a day level.

Saudi drives the OPEC bus. I do think this is more a shot across the bow,” said Croft.

Iraqi Oil Minister Jabbar Ali Al-Luiebi said that Iraq would be producing 5 million barrels a day by the second half of the year, after just reaching 4 million barrels a day in mid-2016. He also said export capacity could ultimately get to 7 million barrels a day, but he told CNBC after his remarks in Houston that Iraq does not want to “unsettle” the market.

Another thorn in the side of the deal between the Organisation of the Petroleum Exporting Countries and other producers has been the U.S. shale industry, which has turned the pumps back on as the production deal pushed oil above $50. The U.S. is now producing more than 9 million barrels a day. A surge in supply in the weekly U.S. inventory data helped kick off what’s been a more than 10 percent decline in oil prices.