Opec production rebounds in August

Opec crude production rose slightly last month from a more than five-year low in July, driven by stronger output from the group's two largest producers, Saudi Arabia and Iraq, as well as Nigeria.

Production rose by around 150,000 b/d to 29.71mn b/d in August. The 11 Opec members participating in the ongoing Opec, non-Opec output restraint deal collectively produced around 230,000 b/d below their combined target. This brought their August compliance rate to 128pc, down from a 2019 high of 158pc in July.

The biggest monthly increase was from the group's de facto leader Saudi Arabia, where production rose by 100,000 b/d to 9.7mn b/d in August. Saudi Arabia said last month that it would keep its output in August-September around July's level of 9.6mn b/d, as part of a wider effort to stem price falls. But Riyadh continues to lead by example despite last month's increase — its August output was more than 600,000 b/d below its agreed ceiling of 10.3mn b/d.

Firmer exports and demand from domestic refineries pushed output in Iraq up by 40,000 b/d from July to a new all-time high of 4.76mn b/d in August. The month-on-month increase reaffirms Baghdad's reputation as one of the outliers on compliance, with the country producing 250,000 b/d above its target. Iraq has only adhered to its output quota once this year, in March.

Nigeria also continued its pattern of weak compliance, boosting production by 60,000 b/d to 1.95mn b/d in August and matching a near two-year high reached in June. Nigeria's crude output has been steadily rising since the third quarter of 2016, with the country exceeding its 1.69mn b/d quota every month since joining the output restraint deal late last year.

The Joint Ministerial Monitoring Committee, which oversees compliance of the production cuts, is scheduled to meet in Abu Dhabi on 12 September, to review market fundamentals and discuss plans for the fourth quarter of this year.

The most significant month-on-month declines were in Iran, Libya and Venezuela, which are all exempted from the production cuts agreement.

Libyan output slipped by 30,000 b/d to 1.03mn b/d last month, as the country's biggest field, El Sharara, was off line on 30 July-9 August because of pipeline sabotage.

Production in Iran edged down to 2.22mn b/d in August as the country struggles to keep its exports flowing in the face of US sanctions. Venezuelan output fell to 750,000 b/d last month from 780,000 b/d in July, as production from fields in the country's western division was hampered by continuing power outages and deteriorating economic conditions.