Opec deal talks loom as April steady with March

Production by the 11 Opec members with quotas remained well below target in April, despite rising slightly from March

Opec production held steady in April as rising output in Iraq, Libya and Nigeria offset involuntary losses in sanctions-hit Iran and some west African producers.

Output stood at 30.14mn b/d last month, largely unchanged from a near-five year low in March. The 11 Opec members participating in the output restraint deal produced 420,000 b/d below their combined target, representing a compliance rate of over 150pc, down from 156pc in March.

The biggest decline came from Iran, which is exempt from the Opec/non-Opec deal that seeks to strip out 1.2mn b/d of supply in January-June. Output fell by 150,000 b/d to 2.6mn b/d — its lowest for more than 20 years. The drop came as buyers began scaling back their purchases, particularly in the second half of the month, ahead of the expiry of their waivers from US sanctions in early May. Iran's crude exports were 1.21mn b/d in April, preliminary Argus tracking shows, down from 1.33mn b/d in March. This is only likely to fall further in the coming months after Washington opted not to renew the waivers.

Saudi Arabia, which is under pressure from Washington to compensate for the sanctioned Iranian crude, produced 9.8mn b/d in April, only 10,000 b/d above the more-than two-year low of 9.79mn b/d that it produced in March. Output was just over 800,000 b/d below its October baseline and over 500,000 b/d below its production deal target.

US president Donald Trump has said Saudi Arabia, among others, will "more than make up the oil flow difference in our now full sanctions on Iranian oil", but Riyadh is maintaining a more measured approach. Saudi oil minister Khalid al-Falih says Saudi Arabia "will meet the wishes of our customers, including those who intend to replace the supply of Iranian oil", but will do so within the framework of the Opec/non-Opec agreement. Saudi sources say customers have requested only a modest increase for June, with exports scheduled to stay under 7mn b/d next month.

Libya, which is also exempt from the deal, was responsible for the biggest month-on-month output increase in April. Production climbed to 1.22mn b/d — the highest since May 2013 — buoyed by the ramp-up of the 300,000 b/d El Sharara field. Libyan crude exports rose for a fourth month running to 1.16mn b/d in April, according to preliminary Argus tracking.

Venezuelan production edged up to 800,000 b/d in April as state-owned oil firm PdV overcame a string of power shutdowns that caused crude production to drop sharply in March.

Taking the weather

Iraqi production rose to 4.6mn b/d in April from a nine-month low of 4.5mn b/d in March, amid better weather conditions in the south of the country, where its export terminals are located. The increase pushed down the country's compliance with its output target to just 38pc from close to 110pc in March, flying in the face of a recent pledge by oil minister Thamir Ghadhban "to have strict adherence" to its commitments.

Iraq has been invited to join the JMMC committee that oversees the various parties' compliance with the production deal in the hope that it will encourage Baghdad to deliver on its pledge.

Output in compliance laggard Nigeria increased by 100,000 b/d to 1.87mn b/d in April, more than 180,000 b/d above the target it pledged to cap its production at under the deal.

The JMMC is scheduled to next meet in Jeddah on the Saudi Red Sea coast on 19 May, when the alliance will discuss its plans for the second half of the year.