We estimate OPEC production fell sharply m/m by 1.78 mb/d to 27.97 mb/d in September, lower y/y by 3.90 mb/d and the lowest reading since September 2003 based on the current OPEC membership. This raised compliance with the OPEC+ agreement to 316%, from 108% in August.
The 14 September attacks on Saudi Arabia’s 1.45 mb/d Khurais field and 7 mb/d Abqaiq processing facility were the main cause of the decline. We estimate Saudi production fell m/m by 1.72 mb/d to 8.11 mb/d (784% compliance). Immediately after the attack 5.7 mb/d of production was offline, as many fields were shut-in as a precaution. Saudi Aramco moved swiftly to restart undamaged fields and carry out emergency repairs. By early October, Saudi officials stated production was up to 9.9 mb/d. The pace of the ramp up has been impressive, although we always expected most production to resume rapidly. Still, we believe Saudi Arabia currently has no spare capacity (despite Saudi claims productive capacity is back up to 11.3 mb/d) and also suspect there is a shortfall in processing capacity, likely meaning some untreated crude is being put into storage tanks and is thus not suitable for immediate export. In short, the Kingdom has prioritised short-term fixes, to avoid derailing the Aramco IPO timeline, but it will take months to complete repair works. Still, the rapid recovery together with the lack of US or Saudi military response against Iran has resulted in oil prices falling back below pre-attack levels.
Venezuelan output fell m/m by 80 thousand b/d to 0.65 mb/d in September. A decline in exports has led to storage filling up, forcing PDVSA to halt blending and shut in production. We expect output to fall below 0.6 mb/d in October despite the restart of one blender. Iranian output dropped by another 70 thousand b/d to 2.04 mb/d. Libyan produced 1.09 mb/d (+80 thousand b/d m/m) as the 0.3 mb/d Sharara field was online for the full month, and the UAE ramped up by 50 thousand b/d more at 3.14 mb/d (29% compliance) to offer alternatives to Saudi exports.
The average of third-party estimates we collect put OPEC production at 28.49 mb/d, lower m/m by 1.30 mb/d, with compliance at 274%. Third parties show a smaller 1.20 mb/d fall in Saudi output to 8.58 mb/d, as several sources estimated production averaged above 9 mb/d.
October OPEC production should rebound strongly, to around 29.1 mb/d. We assume Saudi production will average just over 9.3 mb/d as repairs to Abqaiq lead to smaller output losses than in September. Disruptions due to protests will cut October output in Ecuador by 0.1 mb/d at the very least. Still, we have raised our OPEC Q4 19 estimate by 0.25 mb/d to 29.60 mb/d and our 2020 forecast by 0.18 mb/d to 30.64 mb/d, led by Nigeria due to strong output from the 0.2 mb/d Egina field and some reclassification from condensate to crude in our balances.