Oil-producing nations reject IEA Data putting strain on US-Saudi relations


An OPEC decision on using oil related data indicate further development in ties between Saudi Arabia and U.S.

A Reuters report said:

‘A decision driven by Saudi Arabia that OPEC+ should stop using oil data from the West’s energy watchdog reflected concern about U.S. influence on the figures, sources close to the matter said, adding to strain on ties between Riyadh and Washington.

‘The Organization of the Petroleum Exporting Countries and allies including Russia, a group referred to as OPEC+, has so far ignored Western calls to increase output to try to lower oil prices of around $100 a barrel.

‘The issue is delicate as expensive energy, in part because of Russia’s war with Ukraine, has stoked inflation and as U.S. President Joe Biden faces pressure to lower record U.S. gasoline prices ahead of mid-term elections in November.’

The Reuters report said:

‘Any willingness on the part of Riyadh and its allies to help the United States has been eroded as Washington has not addressed Gulf concerns about Iran at nuclear talks in Vienna, has ended its support for offensive operations by a Saudi-led coalition in Yemen and imposed conditions on U.S. weapons sales to Gulf states.

‘In addition, Biden has not dealt directly with Saudi Crown Prince Mohammed bin Salman, the de facto ruler of the kingdom.

‘A White House spokesman declined to comment.’

The Reuters report added:

‘Against this backdrop, an OPEC+ technical discussion that lasted over six hours in March ended with a unanimous decision to eliminate the International Energy Agency’s (IEA) numbers when assessing the state of the oil market.

‘The meeting was co-chaired by Saudi Arabia and Russia and also attended by Algeria, Iraq, Kazakhstan, Kuwait, Nigeria, the United Arab Emirates and Venezuela, the sources said.

‘The decision is largely symbolic as OPEC+ could always choose to select which numbers it uses from six non-OPEC sources when forming its view of the balance of supply and demand in the oil market.

‘That it formally dropped the data reflects a build-up of frustration, six sources said, over what OPEC+ saw as the IEA’s bias towards its biggest member the United States.

‘In particular, the sources cited the IEA’s big upward revision in historical demand in February, as well as the agency’s view of how much Russian crude western sanctions would remove from the market, which they saw as exaggerated.

‘”The IEA has an independence problem, which is translating into a technical assessment problem,” one of the sources directly involved in the decision told Reuters.

‘The sources spoke on condition of anonymity because of the sensitivity of the issue.

‘Saudi Arabia’s and the United Arab Emirates’ energy ministries did not reply to a request for comment.

‘One of the sources went as far as to describe the situation as a “cold war” and blamed the IEA for starting it.

‘The IEA told Reuters its data analysis was politically neutral.

‘”The IEA strives to provide an unbiased and independent view of oil market fundamentals and political considerations have never been a factor in how the agency assesses the market outlook,” it said in an emailed response to questions.

‘”The oil market report includes supply, demand and inventory data from official sources, supplemented by estimates where no data is available,” it said.’

The report said about history of the IEA:

‘The IEA was established in 1974 to help industrialized nations deal with the oil crisis after the Arab embargo squeezed supplies and sent prices surging.

‘The body, which groups 31 industrialized countries, advises Western governments on energy policy and counts the United States as its top financier.

‘It has seen energy markets transformed since its creation, and the relationship with OPEC has ebbed and flowed.

‘Even before the heightened tension this year, an inflection point for Saudi Arabia and its close ally the United Arab Emirates was the IEA’s report ahead of United Nations climate talks in Glasgow late last year.

‘The report concluded that if the world was serious about reaching net zero emissions by 2050, then no investment should be made in new hydrocarbon projects.

‘That has exacerbated OPEC+ concern the IEA was ignoring the extent of continued demand in the medium term, the sources say, and OPEC+ bridled at the IEA request for extra oil to lower prices to suit the West when it considered the market was adequately supplied.

‘In addition to the comment from sources, some in OPEC have been openly critical.

‘The United Arab Emirates’ energy minister Suhail al-Mazrouei, addressing an industry conference at the end of March, asked the IEA to be “more realistic” and not issue misleading information.’

The Reuters report said about shifting baseline:

‘The IEA in February took the oil market by surprise when it revised its baseline estimate of global demand by nearly 800,000 barrels a day, just under 1% of the roughly 100 million bpd global oil market.

‘The revision, which followed an upward reassessment of petrochemicals demand in China and Saudi Arabia back to 2007, leads to a view that the oil market is tighter than previously thought, increasing the argument OPEC should try to increase output more quickly, analysts said.

‘One of the sources said Saudi Arabia disagreed with the reassessment.

‘The IEA said disruptions caused by the pandemic had made it more difficult to get accurate figures and that it published its revision as soon as the information had become available.

‘”The IEA had noted for some time an increasing mismatch in observed and implied inventory changes and the revision to our historical oil demand estimates incorporated in the February report went some way to close that gap,” it said.

‘The IEA’s predictions of the impact of sanctions on Russian production have also drawn criticism from within OPEC as being designed to press the case for an OPEC output increase, the sources said.

‘The IEA has said Russian oil output could drop by 3 million bpd from April, while trading houses, such as Vitol and Trafigura, said Russian oil exports could fall by 2-3 million bpd. Russian oil output was down by less than 1 million bpd in early April, according to analyst estimates and Russian data.

‘”We based our initial assessment of exports on statements from a number of companies already announcing they would reduce or cut their purchases of Russian oil but noted increased interest in discounted barrels that could provide an offset,” the IEA said.

‘”As we indicated, given the rapidly evolving circumstances, the estimate is under continuous review and will be revised as necessary.”’

The Reuters report added:

OPEC+ has so far resisted calls by the U.S. and the IEA to pump more oil to cool crude prices that rose to 14-year highs. Saudi Arabia and the United Arab Emirates, which hold the bulk of spare capacity within OPEC, have both said OPEC+ should stay out of politics and at a monthly meeting at the end of March the group struck to a previously planned modest monthly increase.

President Biden and his allies have taken the view that a lot more supply is needed to lower prices. The U.S. has announced it will make a record release of up to 180 million barrels of oil from its Strategic Petroleum Reserve (SPR).

The IEA last week said it planned to release 120 million barrels of oil over six months.

It Is Nearly Impossible To Replace Russian Oil Supply Loss, OPEC Tells EU

Media reports said:

The OPEC has told the European Union (EU) on Monday that current and future sanctions on Russia could create one of the worst ever oil supply shocks and it would be impossible to replace those volumes, and signaled it would not pump more.

The EU officials held talks in Vienna with the OPEC representatives amid calls for the group to increase output and as the EU considers potential sanctions on Russian oil.

“We could potentially see the loss of more than 7 million barrels per day (bpd) of Russian oil and other liquids exports, resulting from current and future sanctions or other voluntary actions,” said OPEC Secretary General Mohammad Barkindo. “Considering the current demand outlook, it would be nearly impossible to replace a loss in volumes of this magnitude.”

Barkindo said the current highly volatile market was a result of “non-fundamental factors” outside OPEC’s control, in a signal the group would not pump more.

The EU again called in the meeting for the oil-producing countries to look at increasing deliveries to help cool soaring oil prices, said a European Commission official.

OPEC has resisted calls by the U.S. and the IEA to pump more crude to cool prices, which reached a 14-year peak last month after Washington and Brussels imposed sanctions on Russia.

OPEC+ will raise output by about 432,000 barrels per day in May, as part of a gradual unwinding of output cuts made during the worst of the COVID-19 pandemic.

The OPEC Secretary General told the EU officials that the current crisis in global oil markets is beyond the group’s control.

Russian oil supply losses stemming from current and future sanctions or a boycott by customers could potentially exceed 7 million barrels a day, Barkindo said on Monday. That would be far beyond the OPEC+’s capacity to replace, he told EU Energy Commissioner Kadri Simson.

Barkindo said that markets are being swayed by political factors rather than supply and demand, leaving little for the organization to do.

“These crises have compounded to create a highly volatile market,” Barkindo said, according to the text of his opening remarks. “I must point out, however, that these are non-fundamental factors that are totally out of our control at OPEC.”

The two representatives spoke during the regular dialogue between the EU and the OPEC.

Oil prices continue to trade near $100 a barrel. The price rally has bolstered fuels like diesel, adding to the inflationary pressures and cost-of-living crisis hitting many consumers.

‘It’s All Politics’: Canada’s Planned Oil And Gas Boost Was Forecast Before Ukraine War

Another media report said:

Ottawa’s pledge to boost oil and gas production this year to help ease the impact of sanctions tied to Vladimir Putin’s war, closely matches growth forecasts made prior to the invasion, raising questions among industry observers about the announcement’s significance.

‘”I don’t think any of the actual production increases have anything to do with Russia and Ukraine,” said Rory Johnston, managing director and market economist at Price Street, and the author of the Commodity Context newsletter. “This was all on the books well before Russia invaded Ukraine.”’

Saudi State-funded TV Aired Sketch Mocking Biden As Forgetful, Sleepy Old Man

A Business Insider report said:

‘A major Saudi government-owned broadcaster aired a sketch mocking President Joe Biden as US-Saudi relations plunge to a new low.

‘In the comedy sketch on MBC’s “Studio 22” show, which aired Monday, Biden’s character appeared sleepy and forgetful, wandering offstage before being tugged back by a likeness of Vice President Kamala Harris.

‘Biden is then seen confusing Spain and Africa, forgetting Russian President Vladimir Putin’s name, and mistakenly calling Harris his “first lady.” The sketch then ends with the Harris character dragging the sleeping Biden character off stage.

‘It is rare to see the leaders of major Saudi partners, such as Biden, mocked in this way.

‘Under Crown Prince Mohammed bin Salman, the country’s de facto leader who is also known as MBS, the Saudi entertainment sector has relaxed substantially, allowing more room for things like obscene comedy and music festivals, which have traditionally rankled conservative Saudis.

‘The Biden skit is also notable given it comes at a time when relations between Saudi Arabia and the U.S. are at rock bottom.

‘In an interview with The Atlantic magazine published last month, MBS made clear his view of Biden, saying he didn’t care what the U.S. president thought of him.

‘Following Russia’s invasion of Ukraine, MBS reportedly ignored Biden’s phone calls. Biden had hoped to get Saudi Arabia to produce more oil to make up for the impact of the U.S. ban of Russian oil imports.

‘Though the U.S. and Saudi Arabia became close partners following the discovery of oil in the Gulf in the 1950s and worked together to combat extremism following the September 11, 2001, attacks, many in the U.S. political and business communities blacklisted Saudi Arabia after the 2018 murder of the journalist Jamal Khashoggi.’


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