The OPEC+ producers pumped 41.559 million barrels per day (bpd) of crude oil in June, up by 349,000 bpd from May, but lower than the 411,000 bpd monthly increase under the alliance’s output hike plan.
These production figures, reported by OPEC in its Monthly Oil Market Report (MOMR) out on Tuesday, suggest what market analysts have been saying for weeks—the actual monthly production hikes are lower than the headline quota number, which spooked the market, fearing oversupply when the output hikes were first announced.
OPEC-only production from the 12 members of the cartel rose by 220,000 bpd in June from May, with Saudi Arabia boosting output by 173,000 bpd. The Saudi output of 9.356 million bpd, per OPEC’s numbers based on secondary sources tracking production and supply, was in perfect alignment with the Saudi quota.
But in the table with self-reported figures, OPEC put an asterisk – in a very unusual move – next to the Saudi production number of 9.360 million bpd, explaining below that “Saudi Arabia’s supply to the market in June was 9,360 tb/d and production was 9,752 tb/d.”
This was likely to address speculation about Saudi production and compliance, following a report last week by the International Energy Agency, which estimated that the Kingdom hiked its June production by 700,000 bpd to 9.8 million bpd – the highest level in more than two years.
Saudi Arabia has acknowledged that it pumped briefly above quota for several days in June during the Israel-Iran war when the markets feared a disruption to supply. The overproduction didn’t hit the market, the Kingdom claims, noting that the extra barrels went to storage.
That could be a reason why OPEC assessed Saudi output by differentiating between “supply to the market” perfectly in line with the OPEC+ quota and the much higher “production” numbers.
The OPEC report also showed that perennial quota busters Iraq and Kazakhstan behaved quite differently in June. Iraq, OPEC’s second-largest producer, saw production barely up despite the large increase it is entitled to, as it appears it’s trying to compensate for previous overproduction.
Non-OPEC producer Kazakhstan, however, continues to hike production, and the June increase was 64,000 bpd to 1.847 million bpd—well above its June quota of 1.5 million bpd.
By Charles Kennedy for Oilprice.com
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