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Saudi Arabia, UAE set all-time crude output highs as OPEC Oct total dips to 33.04 mil b/d: Platts OPEC survey

Highlights

Iran falls 210,000 b/d ahead of sanctions

Saudi Arabia produces 10.67 mil b/d

Libya pumps most since June 2013

London — Sanctions-hit Iran's accelerating production decline nudged down OPEC's October crude output to 33.04 million b/d, a 30,000 b/d dip from September's 22-month high, according to an S&P Global Platts survey of analysts, industry officials and shipping data.

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The dramatic 210,000 b/d month-on-month fall from Iran, along with smaller drops in Kuwait, Venezuela and Iraq, outpaced gains by Saudi Arabia and the UAE, both of whom set record highs in production, the survey found.

Saudi Arabia pumped 10.67 million b/d in the month, its most in the 30-year history of the Platts OPEC survey, while key ally the UAE also set an all-time high at 3.17 million b/d. Libya produced its most since June 2013 at 1.10 million b/d.

But Iran saw its crude output tumble to 3.29 million b/d, the survey found, as customers stayed away to remain in the good graces of the US, which reimposed sanctions targeting Iran's oil sales Monday.

The October figure is the lowest for Iran since March 2016, when the country was recovering from the previous round of sanctions, which were lifted in January of that year, according to the survey. It is also a 540,000 b/d drop from May, the month in which the US announced it was withdrawing from the Iran nuclear deal and intending to bring the sanctions back.

Economically reeling Venezuela's production dropped to 1.18 million b/d in October, a 650,000 b/d year-on-year contraction and its lowest in Platts OPEC survey records. Kuwait saw a 60,000 b/d month-on-month drop, and Iraq, OPEC's second largest producer, saw a 30,000 b/d fall, as exports declined from its southern ports, the survey found.

Even with OPEC's October production dip, the survey indicates that OPEC and its 10 non-OPEC partners have surpassed their stated aim of raising production by a combined 1 million b/d from May levels to keep the market well-supplied and offset expected declines from Iran and Venezuela.

According to the survey, OPEC produced 820,000 b/d more than it did in May, not including Congo, which joined the organization in June, while top non-OPEC ally Russia on Friday reported a record high in its October output of 11.41 million b/d, up about 440,000 b/d from May.

PRODUCTION POLICY IN FLUX

But with so many key producers pumping all out, OPEC's tight spare capacity will bear watching, especially if the sanctions bite hard on Iran and Venezuela continues its collapse.

Saudi Arabia, which holds the bulk of global spare capacity, claims it can pump up to 12 million b/d if needed -- and 12.5 million b/d if its political standoff with Kuwait over two Neutral Zone fields is resolved.

The UAE, which like Saudi Arabia had pledged to boost output over the past few months, has said it can reach 3.5 million b/d by the end of the year.

Fatih Birol, the International Energy Agency's executive director, told Platts on Tuesday that major producers would need to continue supplying robust volumes to head off the risks of any supply shocks, including from the US sanctions on Iran.

The oil market is "not out of the woods yet," Birol said.

However, OPEC has warned that its analysts foresee a weak market in the first quarter of 2019, as seasonal demand wanes and many refineries undergo maintenance, which may prompt members to dial back their output.

The US has also handed Iran a bit of a reprieve, granting temporary waivers to eight countries to continue importing Iranian oil. This may help OPEC's third largest producer stave off further significant losses in the short term, though the US has said its goal remains bringing Iran's exports down to zero.

An OPEC/non-OPEC monitoring committee late last month said in a statement it was concerned that rising inventories and "looming macro-economic uncertainties ... may require changing course."

The committee is scheduled to meet Sunday in Abu Dhabi to assess market conditions and determine next steps. The next full OPEC meeting, when any policy change would be decided, is December 6 in Vienna.

Based on the survey figures, OPEC's quota compliance among its 12 members with caps rose in October to 118% from 110% in September, largely on the Iranian output decline.

OPEC PRODUCTION (IN MILLION B/D)

Country Oct Sep Change
Algeria 1.06 1.06 0
Angola 1.53 1.51 +0.02
Congo 0.32 0.32 0
Ecuador 0.53 0.54 -0.01
Equatorial Guinea 0.12 0.11 +0.01
Gabon 0.18 0.18 0
Iran 3.29 3.50 -0.21
Iraq 4.62 4.65 -0.03
Kuwait 2.76 2.82 -0.06
Libya 1.10 1.05 +0.05
Nigeria 1.89 1.88 +0.01
Qatar 0.62 0.62 0
Saudi Arabia 10.67 10.60 +0.07
UAE 3.17 3.01 +0.16
Venezuela 1.18 1.22 -0.04
TOTAL 33.04 33.07 -0.03

OPEC PRODUCTION VS ALLOCATIONS (IN MILLION B/D)

Country Oct Allocation Over/Under
Algeria 1.06 1.04 +0.02
Angola 1.53 1.67 -0.14
Congo* 0.32 n/a n/a
Ecuador 0.53 0.52 +0.01
Equatorial Guinea 0.12 0.13 -0.01
Gabon 0.18 0.19 -0.01
Iran 3.29 3.80 -0.51
Iraq 4.62 4.35 +0.27
Kuwait 2.76 2.71 +0.05
Libya** 1.10 1.00 +0.10
Nigeria** 1.89 1.80 +0.09
Qatar 0.62 0.62 0
Saudi Arabia 10.67 10.06 +0.61
UAE 3.17 2.87 +0.30
Venezuela 1.18 1.97 -0.79
TOTAL*** 33.04 32.73 +0.31

* Congo has not been given an allocation
** Libya and Nigeria were given an unofficial combined 2.80 million b/d cap, near their presumptive maximum sustained production capacities of 1.00 million b/d and 1.80 million b/d, respectively
*** Total allocation does not include Congo

Notes: On June 23, OPEC and 10 non-OPEC producers agreed to boost output by a combined 1 million b/d by reducing overcompliance with production cuts but left unsettled how that will be apportioned.
The estimate for Iraq includes volumes from semi-autonomous Iraqi Kurdistan.
The Republic of Congo joined OPEC in June, becoming the organization's 15th member.
The next OPEC meeting is December 6.

-- Herman Wang, herman.wang@spglobal.com

-- Eklavya Gupte, eklavya.gupte@spglobal.com

-- Edited by Maurice Geller, newsdesk@spglobal.com