IEA surprises with significantly higher oil production from Saudi Arabia – Commerzbank
|The International Energy Agency has slightly lowered its forecasts for oil demand. It expects an increase of 700,000 barrels per day for this year and next. This is the smallest increase since the slump in 2020 during the coronavirus pandemic. However, the most attention was drawn to the IEA's report of a sharp increase in Saudi Arabia's oil production in June by 700,000 barrels per day to 9.8 million barrels per day. This put production a whopping 430,000 barrels per day above the agreed level, Commerzbank's commodity analyst Carsten Fritsch notes.
Saudi output surges, OPEC+ unity at risk
"This means that Saudi Arabia had already produced more in June than would be permitted after the significant production increases in July and August. The high production figure also came as a surprise because the production surveys conducted by Bloomberg and Reuters had shown significantly lower figures within the agreed volume of 9.37 million barrels per day. The IEA attributes the significantly higher figure to an increase in net exports of 500,000 barrels per day and crude oil processing of 300,000 barrels per day."
"It is also noteworthy that Saudi Arabia is said to have asked OPEC to report lower production figures for June in order to meet the production target. This was reported by Bloomberg, citing people familiar with the matter. Thus, lower production figures in the OPEC monthly report do not necessarily indicate actual lower production volumes."
"The question now is whether this figure will turn out to be a one-off outlier or, as in the case of the United Arab Emirates, a permanent deviation in production volume compared to other data providers. A permanent significant deviation by Saudi Arabia from its production target would jeopardize the cohesion of OPEC+, because other countries with free production capacity could then increase their production without consultation."
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