IEA, Energy Ministry tell different tales on June oil output

IEA and Saudi Arabia at odds: Saudi Arabia pumped 9.8 mn bbl / d of oil last month, a 700k bbl / d increase from June, with 70% of the additional production exported, according to the The International Energy Agency’s (IEA) July Oil Market Report. The June figure is 430k barrels above the our Opec+ quota of 9.37 mn bbl / d, the agency says.

BUT- The Energy Ministry reaffirmed the Kingdom’s compliance with Opec+ quotas, citing a marketed supply of 9.35 mn bbl / d, it said on X on Friday. The Ministry acknowledged it briefly pumped extra oil into storage due to geopolitical tensions

It all comes down to the metric: The Ministry is asking independent oil trackers to report its June output using an alternative “supply-to-market” metric instead of standard production, Bloomberg reports, citing people it says are familiar with the matter. The IEA’s figures include oil moved into storage of around 450k bbl / d, which — if excluded — would place the Kingdom within its Opec+ quota.

Behind the discrepancy: The Kingdom sought to strategically increase shipments to international storage locations, including the Sumed pipeline in Egypt which received an additional 5 mn barrels in June, to reposition supplies during the regional conflict. Those barrels, the Kingdom argues, have not been released to the market and should therefore not be considered a breach of its Opec+ target.

IN CONTEXT- Gulf producers — including Iraq, Kuwait, and the UAE — rushed to export oil from the Persian Gulf following the outbreak of war between Israel and Iran, Bloomberg reports, citing IEA data. Meanwhile, Iran’s production declined by 400k bbl / d to 3.1 mn bbl / d due to the conflict.

Saudi potentially flouting quotas raised some eyebrows, as the Kingdom has been mounting increasing pressure on Opec+ cheats — hello, Kazakhstan — to compensate for months of pumping above quotas, with the accelerated hikes agreed by the cartel since April widely framed as a Saudi-led push to punish overproducers.

Surplus, surplus: The influx of crude is exacerbating a global market surplus caused by slowing demand and booming production from non-Opec+ countries, the IEA said. Oversupply has pushed oil futures down roughly 13% to around USD 69 a barrel since mid-June, overriding concerns about regional conflicts.

Looking ahead: The IEA has downgraded its 2025 forecast for global oil consumption, penciling in 700k bbl / d growth — the slowest pace in 16 years excluding the 2020 pandemic. The IEA projects inventories will swell by 2-3 mn barrels per day through 4Q 2025 and 1Q 2026.

Despite the gloomy forecast, the IEA noted that current conditions tell a different story. “Price indicators also point to a tighter physical oil market than suggested by the hefty surplus in our balances,” the agency noted, pointing to the differences between monthly futures contracts and “healthy” margins for refiners.