Saudi Arabia confounds with September output figure

Saudi Arabia has told the Opec Secretariat that its crude production fell by 660,000 b/d last month to 9.13mn b/d, underlining its swift recovery from the 14 September drone and missile attacks on key oil infrastructure.

The average estimate from secondary sources, including Argus, pegged Saudi output at 8.56mn b/d in September. Argus' estimate was 8.4mn b/d.

The divergence between Saudi Arabia's self-reported figure and secondary sources is unusually wide in Opec's latest Monthly Oil Market Report (MOMR). Opec's previous 12 MOMRs have shown a much closer correlation, with the average secondary sources' estimates of Saudi production ranging from 99.1pc to 100.3pc of the official figure. For September, the secondary sources were at 93.8pc of the Saudi direct communication.

State-owned Saudi Aramco chief executive Amin Nasser admitted yesterday that the pace of the output recovery "surprised many" and that "optimum flexibility and fail-safe redundancy built in… proved essential".

The mid-September air strikes on the Abqaiq processing plant and the 1.45mn b/d Khurais field briefly shut in 5.7mn b/d of production. Saudi Arabia said its crude production capacity has reached 11.3mn b/d and that it is on track to hit pre-attack levels of 12mn b/d by the end of November. "Considering the progress so far we might even beat that target", Nasser said.

Beyond the Saudi production number, Opec's latest MOMR has little in the way of surprise revisions, although there is a notable 160,000 b/d cut in the forecast for non-Opec supply growth for this year, to 1.82mn b/d. This is driven by a downward revision in the US.

"A further slowdown in US oil production is likely as shale producers, under pressure from their investors, continue to cut spending, in particular for exploration and production and seem to be pacing their drilling plans for the rest of the year," the MOMR said.

Opec revised lower its forecast for non-Opec supply growth for next year, by 50,000 b/d from the previous report to 2.2mn b/d.

It pared back its projection for global oil demand growth this year by 40,000 b/d from last month's MOMR to 980,000 b/d, and kept its 2020 growth forecast unchanged at 1.08mn b/d. This would take average total demand above 100mn b/d.

Opec now forecasts demand for its crude at 30.7mn b/d this year, around 100,000 b/d higher than last month's MOMR. It revised up its forecast for call-on-Opec crude next year, by 200,000 b/d to 29.6mn b/d. Argus' estimated total Opec production at an average of 29.9mn b/d in the first nine months of this year.