We estimate that OPEC production fell m/m by 0.23 mb/d to 31.97 mb/d in March, matching March 2017, which was the lowest reading in 2017. This pushed compliance with the OPEC/non-OPEC deal up to an astonishing 171%.
Venezuela once again led the reductions, lower m/m by another 70 thousand b/d to 1.45 mb/d (649% compliance). Despite low domestic refinery runs, with PDVSA reported to be indefinitely closing three of its four refineries in late March, crude exports slipped m/m in March, which is consistent with serious underlying production issues. We have lowered our 2018 production estimate to 1.42 mb/d and still see downside risks to this figure. Algerian production fell m/m by 60 thousand b/d to 0.98 mb/d (218% compliance) due to planned maintenance, some of which continued into April, while Libyan production was lower m/m by 50 thousand b/d to 0.98 mb/d as the El Feel field remained offline throughout March. Angolan output fell by 40 thousand b/d to 1.57 mb/d (232% compliance), primarily due to natural declines, although undisclosed maintenance may have also played a part. Saudi Arabia trimmed its output by another 30 thousand b/d to 9.91 mb/d (131% compliance).
The UAE registered the biggest m/m gain, up by 40 thousand b/d to 2.85 mb/d (117% compliance) as upstream maintenance eased. Iraq increased output by 20 thousand b/d to 4.39 mb/d (81% compliance) as around 50 thousand b/d of production from fields around Kirkuk resumed mid-month. Various reports had suggested various pieces of maintenance at the southern terminals might constrain exports, and hence limit production, in April. However, the latest indications are that work on one of the 0.9 mb/d SPMs has been delayed until May/June and a new offshore pipeline from the Fao terminal is now complete. The 0.35 mb/d Khor al-Amaya terminal has been out of action since a leak in late February and the new pipeline should replace a heavily-corroded old one, allowing exports to resume. Unless the maintenance schedule changes again, we do not expect it to cut southern exports, although the new pipeline may not allow volumes to rise much beyond 3.5 mb/d as other infrastructure constraints persist.
The average of third-party estimates we collect shows OPEC output falling by 0.18 mb/d to 32.07 mb/d, raising compliance to 160%. Differences were limited, although third parties show a smaller m/m decline of 40 thousand b/d in Algerian output to 1.01 mb/d (158% compliance).
We expect OPEC production to remain broadly flat m/m in April. Beyond that, Saudi Arabia has said it will continue to constrain exports in May, suggesting it will keep production below 10 mb/d, and, as noted, there is also downside risk unless the pace of Venezuelan declines eases.