TOKYO/DUBAI, Dec 25: The UAE joined Saudi Arabia in deepening oil supply curbs on Thursday to comply with producer group Opec’s biggest ever output cut last week, telling refiners it would tighten shipping limits on exports of its main grades. Top exporter Saudi Arabia effectively started implementing Opec’s Dec 17 cuts even before the cartel had agreed them, but other members had not until Thursday followed up with clear action, raising questions about compliance.

Oil prices have fallen by more than $110 a barrel since July to about $35 on speculation that Opec is doing too little or too late to offset the slump in global demand.

In a statement, the Abu Dhabi National Oil Co (ADNOC) said customers who buy its Murban and Upper Zakum grades would no longer have the option to load an additional 5 per cent above normal volumes on each cargo, a standard industry practice known as “operational tolerance”.

“Murban and Upper Zakum cargoes will be treated at Max/-5 per cent tolerance loading basis,” said ADNOC, which pumps most of the crude produced in the United Arab Emirates, the world’s fifth-largest oil exporter.

At the same time 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 allocations by 15 per cent, and reduce Lower Zakum and Umm Shaif allocations by 10 per cent each.

“Murban, Lower Zakum, Umm Shaif and Upper Zakum cargoes will be treated at Max/-5 per cent tolerance loading basis,” it said.

Overall, refiners and analysts agreed the notice represented hard evidence of one of Opec’s core members implementing its share of the group’s agreed 2.2 million barrel per day (bpd) production cut, their third since September that amount to removing five per cent of world supply from the market.

The news could aid oil prices that have been undermined by concerns over adherence to Opec’s cuts. US crude fell 9 per cent to about $35 a barrel on Wednesday, near its lowest in over four and a half years after more gloomy US economic data.

“The move shows compliance to Opec’s decision to cut supply and could send a signal for tighter supply ahead. It’s possible that the move could effectively help support prices,” said Soichi Okuda, chief economist at Sumitomo Shoji Research Institute.

Spot differentials for February-loading Murban crude strengthened to a premium of more 10 cents a barrel to ADNOC from flat to less than 10 cents on news of the cuts, traders said.

—Reuters