We estimate OPEC production fell by 0.31 mb/d m/m to 29.71 mb/d in November. This raised compliance with the OPEC+ agreement—still based on old quotas—to 107% in November, from 77% in October.
The m/m declines came from several countries. We estimate Saudi Arabia reduced production by 0.17 mb/d to 9.98 mb/d (203% compliance). Direct communications show a larger reduction of 0.41 mb/d to 9.89 mb/d (231% compliance). Angolan output fell by 70 thousand b/d to 1.27 mb/d (549% compliance) due to maintenance on the Girassol field. Iraq also reduced production by 50 thousand b/d to 4.65 mb/d (2% compliance) as it made some effort to improve compliance ahead of the December OPEC meeting. Output could fall further in December and January if SOMO carries out the 0.1 mb/d cuts instructed by the government.
The only noteworthy m/m increases came from Ecuador and Venezuela. Ecuadorian output rose by 80 thousand b/d m/m to 0.52 mb/d (25% compliance) with the end of protests that disrupted production in October. Ecuador will leave OPEC on 1 January 2020 and will no longer be bound by a quota, although it has failed to deliver its 16 thousand b/d production cut besides involuntarily in October, so we do not expect the country to increase production next year. Venezuelan output also crept higher m/m by 30 thousand b/d to 0.66 mb/d as PdVSA achieved higher loadings over October and November, allowing it to free up tank space and restart blending operations at least temporarily. However, given the absence of political progress, we expect Venezuelan production to average around 0.6 mb/d in 2020.
The average of third-party estimates that we collect shows OPEC production falling by 0.13 mb/d m/m to 29.65 mb/d. Compliance with the OPEC+ agreement rose to 148% in November from 131% in October. Third parties show a smaller decline in Saudi output of 70 thousand b/d m/m, to 9.91 mb/d (225% compliance), stemming from a lower estimate for October (9.98 mb/d).
OPEC+ agreed to deepen its collective production cuts by 0.5 mb/d to 1.7 mb/d in Q1 20. Saudi Arabia also committed to continue its overcompliance by 0.4 mb/d from its new target, so it will produce 9.74 mb/d. Domestic refinery maintenance will still allow it to export around 7 mb/d to meet term contract commitments. Iraq, the UAE and Nigeria all came under pressure to improve compliance due to cheating. OPEC+ will meet again over 5–6 March 2020. We have reduced our forecast for Q1 20 OPEC production by 0.33 mb/d to 29.51 mb/d, with Saudi Arabia accounting for half of the total. We forecast only slightly better compliance from the agreement’s three main ‘cheaters’, and see them collectively producing almost 0.6 mb/d above their new quotas. We then expect OPEC production to grow sequentially to 30.6 mb/d in Q3 20 in response to rising global crude demand.