We estimate OPEC production fell m/m by 0.15 mb/d to 29.85 mb/d in May, lower y/y by 1.76 mb/d and the weakest total since April 2014 based on the current OPEC membership. Still, compliance with the OPEC+ production agreement fell m/m to 123% in May, from 131%, as most of the declines were from countries not subject to limits under the deal.
Nigeria led the losses, lower m/m by 0.15 mb/d at 1.74 mb/d (-4% compliance) as oil theft and sabotage to several pipelines led to force majeure on Bonny and Amenam exports along with delays to Forcados loadings. Delays should ease in June as the force majeures have been lifted, but several June cargoes have been delayed. Libyan output was lower m/m by 90 thousand b/d in May due to pipeline maintenance that reduced flows from the Waha field to the Es Sider export terminal. Venezuelan production fell m/m by 70 thousand b/d to 0.66 mb/d as US sanctions, political turmoil and chronic mismanagement all continued to weigh on the oil sector. While Iranian exports collapsed in May, as buyers backed off after US sanctions waivers expired on 1 May, production fell by just 50 thousand b/d to 2.45 mb/d as Iran opted to fill onshore and floating storage rather than shut-in production. Ullage is filling up fast (around 15 mb of onshore storage is still available in mid-June), and loadings are again lower m/m so far in June (by around 0.5 mb/d), so by July we expect larger reductions in output.
We see the largest increase in May coming from Saudi production, up m/m by 0.20 mb/d to 10.00 mb/d (197% compliance), despite direct communication placing output at 9.67 mb/d. Saudi exports were higher m/m, and domestic demand probably rose seasonally, so we view the official numbers as influenced by an attempt to halt the recent slide in oil prices. Iraqi production also rose, up by 70 thousand b/d to 4.65 mb/d (2% compliance), as exports rose.
The average of third-party estimates we collect put OPEC production lower m/m by 0.14 mb/d at 30.08 mb/d, with compliance falling from 137% to 122%. Third parties reported a larger 0.24 mb/d decline in Iranian output to 2.36 mb/d, ignoring the availability of storage capacity. Third parties pegged Angolan production at 1.46 mb/d, a 60 thousand b/d gain but we see a 30 thousand b/d decline to 1.41 mb/d (251% compliance) as exports slipped m/m.
We expect a modest m/m pick-up in June OPEC production as recoveries in Libyan and Nigerian output outweigh Iranian declines. Currently our balances for H2 19 assume Gulf OPEC members sharply increase production, more than offsetting Iran falling to 2.00 mb/d by year-end. However, if OPEC+ agrees to extend the production agreement, OPEC supplies could come in far below our current forecasts, adding to the tightness we already expect in Q3 19.