Opec+ output inches down as compliance improves

Crude production from countries participating in the Opec+ deal edged lower last month as compliance with pledged output cuts continued to improve.

The 19 deal participants produced a total of 34.22mn b/d in September, 50,000 b/d lower than August, giving an overall compliance rate of 103pc, according to Argus' latest monthly survey of Opec+ production. Compliance among the 10 Opec deal participants inched up from August's 103pc to 106pc, while overall Opec output — including deal-exempt Iran, Libya and Venezuela — shed 30,000 b/d to 24.04mn b/d. Gabon and Congo (Brazzaville) were the only Opec members that failed to fulfil their pledges.

Chronic overproducers Iraq and Nigeria produced below their quotas for the second consecutive month. They both remain under pressure to make additional cuts to compensate for overproducing in previous months. Iraq is among the countries that have already submitted compensation plans, according to an Opec+ document seen by Argus.

Opec's de facto leader Saudi Arabia produced just under its 8.99mn b/d quota last month. Higher crude exports — up by 5pc to 6.24mn b/d in September, including Riyadh's share of Neutral Zone shipments — offset a decline in domestic consumption. Analysts estimate Saudi crude use for power generation dropped to just 350-580,000 b/d last month from 700-900,000 b/d in August.

The biggest month-month drop among Opec countries came from the UAE, which produced 80,000 b/d below its 2.59mn b/d ceiling. An increase in direct crude burning for power generation pushed the country to a rare breach of its quota in August. Abu Dhabi plans to continue tightening supplies this month and next — state-owned Adnoc has cut crude allocations by 30pc and 25pc for October and November, respectively.

The largest monthly increase among Opec members came from Libya after the country's warring factions reached a landmark agreement to resume crude production and exports from onshore fields and ports that that have been intermittently blockaded since January. Libyan output hit 285,000-300,000 b/d in recent days, according to a source in the country.

Conformity among the nine non-Opec countries participating in the Opec+ deal softened to 98pc in September, when combined output increased by 60,000 b/d from August to 12.67mn b/d. Russia, the largest non-Opec producer, increased production by 40,000 b/d to 9.08mn b/d, leaving it 90,000 b/d above its quota. Seasonal refinery maintenance will remove almost 250,000 b/d of domestic crude demand in Russia this month, but exports of Russian Urals, Siberian Light and ESPO Blend are scheduled to rise by around 210,000 b/d to 3.17mn b/d.

Azeri production inched higher, but this month's output is at risk of disruption if the 1.2mn b/d Baku-Tbilisi-Ceyhan (BTC) crude pipeline suffers collateral damage from the conflict with neighbouring Armenia over the disputed Nagorno-Karabakh region. Armenia has denied that it is deliberately targeting the BTC infrastructure.

Minor producer South Sudan was once again over its output limit last month, having exceeded its target by an average 46,000 b/d in May-August. The country wants to renegotiate its Opec+ quota because some fields have restarted since it joined the coalition, oil ministry under-secretary Awow Daniel Chuang told Argus.

By Ruxandra Iordache