We estimate that OPEC production fell m/m by 0.26 mb/d in August to 32.70 mb/d, breaking a run of four consecutive increases, and was broadly flat y/y. The decline took compliance back up to 105%, after it fell below 100% in both June and July.
The largest m/m decrease was in Saudi Arabia, which logged a 0.13 mb/d fall to 9.95 mb/d (122% compliance). Waterborne exports fell m/m by a larger 0.54 mb/d according to Kpler data as the Kingdom delivered on the commitment made by its energy minister to reduce August exports to 6.6 mb/d. Saudi September production is likely to remain at similar levels to August, especially given maintenance on the 0.4 mb/d Abqaiq field. The other large August decline came from Libya, where output fell m/m by 0.12 mb/d to 0.86 mb/d. Zintani militants blockaded pipelines in the west of the country, forcing the shutdown of the 0.30 mb/d Sharara, 0.12 mb/d El Feel and 10 thousand b/d Hamada fields for much of the second half of August. These disruptions ended in early September, but production has been slow to return at Sharara following the evacuation of foreign workers, taking nearly a week to rise to 0.2 mb/d. The slow recovery and the potential for further disruptions is likely to keep a lid on Libyan production in September.
Production changes for other OPEC members were relatively minor in August. Iraqi output slipped m/m by 20 thousand b/d to 4.45 mb/d (53% compliance) as Basra exports fell m/m. Venezuelan production also fell further, down m/m by another 10 thousand b/d to 1.89 mb/d. Loadings fell more sharply, impacted by a mixture of planned maintenance work and unplanned issues at the Jose terminal. While exports may partially recover, underlying output will keep trending lower—recent US sanctions are just the latest headache for PDVSA.
The average of third-party estimates that Energy Aspects collects puts OPEC production at 32.71 mb/d in August (93% compliance), lower m/m by 0.18 mb/d. The m/m decline is smaller than our estimate mainly because of Saudi Arabia and Nigeria. In the former, third parties saw a m/m decline of 40 thousand b/d to 10.01 mb/d (110% compliance). For Nigeria, they registered a 50 thousand b/d increase to 1.80 mb/d, largely catching up with the recovery that took place in July.
We expect OPEC production to remain subdued in September, with Saudi output flat and Iraq restating its commitment to the production deal. Any rise in Libyan output will be modest and Nigerian production is largely maxed out and disruption free. Exports from smaller OPEC members such as Qatar and Gabon may recover from low readings in August, but this reflects fluctuations in the timing of loadings rather than changes in underlying production numbers.