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OPEC compliance 110% in September for 12 members with quotas: Platts survey

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OPEC compliance 110% in September for 12 members with quotas: Platts survey

OPEC's 15 countries boosted crude oil output in September to 33.07 million barrels per day, a 180,000 bbl/d rise from August, according to an S&P Global Platts survey of analysts, industry officials and shipping data released Oct. 5, as the producer group seeks to instill confidence in its ability to keep the market well-supplied.

That is the most OPEC has pumped since July 2017, if the Republic of Congo, which joined the organization in June, is not included.

The survey indicates that OPEC and its 10 non-OPEC partners, led by Russia, have surpassed their stated aim of raising production by a combined 1 MMbbl/d from May levels. OPEC's September output was 850,000 bbl/d above where it was in May, not including Congo, according to Platts survey data, while Russia on Oct. 2 reported a record high in its September output of 11.356 MMbbl/d, up 390,000 bbl/d from May.

OPEC has been under fire by the U.S. for not pumping more to bring down oil prices, which have hit four-year highs in recent days over apprehension that the producer bloc would be unable or unwilling to make up for expected output losses from sanctions-hit Iran and economically careening Venezuela.

Platts reported Oct. 3 that the U.S. State Department accused OPEC of withholding some 1.42 MMbbl/d of spare capacity from the market, a charge denied by Saudi energy minister Khalid al-Falih, who said at the Russia Energy Week forum on Oct. 4 that there was adequate supply and that the price rise was due to geopolitics and speculators.

Indeed, Saudi Arabia, OPEC's largest producer and the world's largest crude exporter, pumped 10.60 MMbbl/d in September, according to the Platts survey, a 110,000 bbl/d increase from August.

That more than offset Iran's 100,000 bbl/d month-on-month decline to 3.50 MMbbl/d in September, while Venezuelan production held steady at 1.22 MMbbl/d, the survey found.

But many analysts expect Iran, whose exports are plummeting as its customers cut their purchases, to lose a further 1 MMbbl/d or more after the sanctions go into effect Nov. 5, and Venezuelan production to fall below 1 MMbbl/d by year's end.

Iranian production is down 330,000 bbl/d since May, while Venezuela is down 140,000 bbl/d, according to the Platts survey.

Falih, who said Saudi Arabia's October production is expected to average 10.7 MMbbl/d, said the kingdom was capable of pumping 1.3 MMbbl/d above that, if there was the market demand to justify it. Saudi Arabia holds the bulk of global spare capacity.

An OPEC/non-OPEC monitoring committee is scheduled to meet Nov. 11 in Abu Dhabi to assess market conditions and determine next steps. The next full OPEC meeting, when any policy change would be decided, is Dec. 6 in Vienna.

Compliance coming down

Libya tied with Saudi Arabia for the biggest monthly gain, with its output rising to 1.05 MMbbl/d, as militancy around its oil facilities quieted, according to the Platts survey. That is the violence-torn country's highest production level in more than five years.

Angola also showed a significant gain, with production rising 50,000 bbl/d in September to 1.51 MMbbl/d, due to the ramp up of the Kaombo offshore field.

The UAE at 3.01 MMbbl/d and Kuwait at 2.82 MMbbl/d pumped their most since December 2016, the survey found.

OPEC's second-largest producer, Iraq, saw a 30,000 bbl/d month-over-month fall to 4.65 MMbbl/d, as its crude exports saw a slight dip, according to the survey.

In all, the 12 OPEC members with quotas brought compliance down to 110%, from 115% in August, as the bloc intends to end overcompliance with cuts that have been in force since January 2017 under its plan to boost production by 1 MMbbl/d. Libya and Nigeria were exempted from the cuts, while Congo was never given a quota.

The next OPEC meeting is Dec. 6.

Herman Wang and Eklavya Gupte are reporters for S&P Global Platts, which, like S&P Global Market Intelligence, is a unit of S&P Global Inc. To see more commodities-focused news and analysis, visit Platts.com.