Opec+ pegs cuts compliance at 102pc in September

The Opec+ group's compliance with its collective crude production cut hit a three-month high of 102pc in September, according to an Opec source. This is in line with Argus' assessment of 103pc compliance.

The month-on-month improvement was driven by the 10 Opec participants increasing their combined compliance rate to 105pc last month from 102pc in August, according to the source. Discipline among their non-Opec counterparts faltered slightly, with compliance dropping to 97pc from 99pc. These figures are broadly aligned with Argus' estimate of 106pc for Opec and 98pc for non-Opec.

The Opec+ Joint Technical Committee (JTC), which studies market conditions, is due to hold its monthly meeting tomorrow. The Joint Ministerial Monitoring Committee (JMMC), which oversees compliance, will assemble on 19 October. Compliance numbers are preliminary until confirmed during these meetings.

Last month's improved compliance comes amid a Saudi-led drive to tighten discipline and the creation of a compensation mechanism that obliges overproducers to make additional cuts.

September marked the second month of the second phase of the group's two-year production restraint pact. The deal called for a combined 9.6mn-9.7mn b/d production cut in May-July, easing to 7.7mn b/d for the rest of the year, largely from an October 2018 baseline. The cut is set to moderate by another 2mn b/d as of January, but this may yet be subject to review in light of the recent recovery in Libyan production and continued lacklustre demand. The IEA said today that the current plan to relax output quotas next year provides "limited headroom for the market to absorb extra supply in the next few months".

UAE oil minister Suhail al-Mazrouei said yesterday that he is not "aware" of any changes to the plan to taper output cuts from January. Meanwhile, his Russian counterpart Alexander Novak said the group expects it "will be able to gradually increase production, according to the terms of the deal, without detriment to the market".

By Ruxandra Iordache