We estimate OPEC production rose m/m by 0.40 mb/d to 32.69 mb/d in June, the highest level this year. Our estimates now include Equatorial Guinea (0.16 mb/d), which joined OPEC with immediate effect on 25 May. At the same meeting, the group agreed to extend the November 2016 production deal by nine months to March 2018. Even though much of the monthly increase in OPEC output came from Libya and Nigeria—both exempt from output quotas—compliance with the cuts slipped substantially m/m from 120% in May to 95%, the lowest count for the year, due to falling compliance from Iraq and higher Saudi and Angolan output. Production is likely to have risen further in July on further increases in Libyan and Nigerian output.
Libyan output rose m/m by 80 thousand b/d to 0.82 mb/d, the highest monthly average since June 2013. Output fluctuated significantly in June, with a worker protest shutting the 0.3 mb/d Sharara field for three days early in the month, briefly pushing output below 0.6 mb/d. But by late June, output had risen to 0.94 mb/d, boosted by fields restarting after an interim deal between NOC and Wintershall on a contractual dispute. In early July, output rose past 1 mb/d. Nigerian production was up m/m by a smaller 30 thousand b/d to 1.85 mb/d in June. While Forcados was online and Qua Iboe exports ramped up after the repair of a disrupted pipeline, these gains were largely offset by 10 days of unplanned works on the 0.2 mb/d Bonga field, and Bonny Light exports being somewhat affected by a force majeure for much of June. Those problems were resolved by end-June and militants withdrew a threat to attack infrastructure, meaning July output is likely to rise to around 2 mb/d, barring any new disruptions.
Several countries covered by the deal also raised output. Saudi production rose sharply, by 0.19 mb/d m/m to 10.07 mb/d, the highest this year, with supplies to the market reaching 10.1 mb/d. While the Kingdom claimed this was in part due to higher summer crude burn, exports also rose m/m, which is weighing on market sentiment. Angolan production recovered m/m by 30 thousand b/d to 1.67 mb/d (104% compliance) after the brief force majeure on Saturno in May. Iraqi production also edged up by 40 thousand b/d to 4.46 mb/d (48% compliance) as southern exports were modestly higher m/m and peak summer temperatures likely boosted domestic demand. Slipping Iraqi compliance is a cause for concern among other producers.
The average of third-party estimates that we track put OPEC production at 32.61 mb/d, higher m/m by 0.30 mb/d. Like us, third parties see the gains concentrated in Libya and Nigeria, with Angolan and Saudi production also rising. Overall, third parties peg compliance rates among the other members at 94%, with the IEA pegging compliance at 78%.