Saudi Data Change Allowed Riyadh To Meet OPEC Quota In June

Saudi Arabia managed to stick to its oil output quota last month because of a tweak to what the Organization of the Petroleum Exporting Countries counted as Riyadh’s production levels.

OPEC published its monthly production estimates for member countries on Tuesday, with one submitted by countries directly, and another drawn from a group of so-called secondary sources. The latter figure is closely watched by traders — and other nations within OPEC — because it offers an independent perspective of compliance with the group’s output quota levels.

But for June, Saudi Arabia was able to adopt a different metric — supply to market — that gave a lower reading and allowed it to meet its OPEC pledges. In Riyadh’s own analysis, that supply-to-market figure was 9.36 million barrels a day, a number matched almost identically by OPEC’s independent sources. People with knowledge of the matter said that the figure from the secondary sources was also based on supply to market, not production.

Saudi Arabia already emphasized the use of a supply-to-market number, instead of a more conventional — and higher — production number, that would have led to a quota breach. 

On July 11, the kingdom’s energy ministry said on X that the country had indeed “briefly” raised output last month as hostilities in the Middle East endangered energy flows. But it stressed that much of the boost had gone into storage, and so the “marketed crude supply” delivered to consumers was lower — and a more appropriate number to adopt.

Had the figures been based on a pure production number, then by its own submission Saudi Arabia would have had a figure of 9.752 million barrels a day, about 200,000 barrels a day above its quota, OPEC’s monthly report showed. The report didn’t publish an estimate of Saudi Arabia’s wellhead production from the secondary sources.

Last week, the International Energy Agency — the Paris-based watchdog of consuming nations — reported that Riyadh had boosted output well above its quota as Gulf nations rushed barrels out of the region amid the Israel-Iran war. 

Several of the independent firms that OPEC relies on already said they were asked by Saudi Arabia to switch to the supply-to-market metric — which excludes moves to and from stockpiles — rather than the wellhead production figure they normally assess.

At least two of those companies — S&P Global Commodity Insights and Argus Media — publicly reported figures that were considerably higher than the 9.356 million level attributed to secondary sources in Tuesday’s report from the organization.

The table where countries directly report their own output had an asterisk next to Saudi Arabia to denote that its figure was supply-to-market, not production, an unusual inclusion. 

Meanwhile, OPEC kept its forecasts for global oil demand and supplies outside the group largely unchanged for this year and next. Its estimates are considerably higher than many others in the industry.

The organization projects consumption growth of 1.3 million barrels a day this year, more than double the rate anticipated by Goldman Sachs Group Inc.