Saudi Arabia leads OPEC decision to drop IEA data in US-US war of attrition

  • There are issues including global demand correction in February
  • The IEA report on energy conversion is standardized
  • OPEC + members question the independence of the monitoring system

Dubai, April 12 (Reuters) – Saudi Arabia’s decision to suspend OPEC +’s use of Western energy watchdog oil data reflects concerns over US influence in the figures, with sources close to Riyadh and Riyadh increasing tensions. Washington.

The Organization of the Petroleum Exporting Countries and its allies, including Russia, have so far ignored calls from Western countries to increase production in an effort to reduce oil prices to about $ 100 a barrel, known as OPEC +.

Russia’s war with Ukraine has spurred inflation and US President Joe Biden is facing pressure to record U.S. petrol prices ahead of the midterm elections in November.

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Riyadh and its allies have eroded any desire to help the United States as Washington ignores Gulf concerns about Iran during its nuclear talks in Vienna and suspends support for the Saudi-led coalition offensive in Yemen. Conditions for US arms sales to Gulf countries.

In addition, Biden did not speak directly with Saudi Prince Mohammed bin Salman.

A White House spokesman declined to comment.

Against this background, the OPEC + technical debate, which lasted more than six hours in March, unanimously decided to remove the International Energy Agency (IEA) numbers while assessing the state of the oil market. read more

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

This result is often coded because OPEC + always chooses which numbers to use from the six non-OPEC sources when creating supply and demand balance in the oil market.

Dropping the data systematically reflects frustration, six sources said, with OPEC + looking to the IEA toward its largest member, the United States.

In particular, sources cite the IEA’s major upward revision of historical requirements in February, as well as their exaggeration of the agency’s view of how much Russian crude Western sanctions will be removed from the market. read more

“The IEA has an independent problem, which translates into a technical assessment problem,” one of the sources directly told Reuters at the conclusion.

Sources spoke anonymously due to the sensitivity of the issue.

The Ministries of Energy of Saudi Arabia and the United Arab Emirates did not respond to a request for comment.

One source went so far as to describe the situation as a “Cold War” and blamed the IEA for initiating it.

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

“The IEA strives to provide an impartial and independent view of the fundamentals and political considerations of the oil market, which has never been a factor in how a company evaluates its market outlook,” it said in an email.

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

Born in crisis

The IEA was founded in 1974, and the Arab embargo has helped industrialized nations overcome the oil crisis and pushed up prices.

The group of 31 industrialized nations advises Western governments on energy policy and considers the United States as its primary financier.

Since its inception the energy markets have seen transformation, and the relationship with OPEC is declining.

Even before this year’s escalating tensions, Saudi Arabia and its closest ally, the United Arab Emirates, had been the target of an IEA report ahead of the UN climate talks in Glasgow late last year.

The report concludes that the world should not invest in new hydrocarbon projects if it is serious about reaching net zero emissions by 2050.

This has exacerbated OPEC + concerns, with the IEA ignoring the level of continued demand over the medium term, sources say, and OPEC + considering lowering prices in line with IEA demand and providing adequate market support.

In addition to the opinion of the sources, some in the OPEC have openly criticized.

UAE Energy Minister Suhail al-Masroui, speaking at an industry conference in late March, called on the IEA to be “very realistic” and not to publish misinformation.

Shifting baseline

In February, the oil market was taken aback when the IEA revised its base estimate for global demand to nearly 800,000 barrels a day. read more

The revision, which follows an upward revaluation of petrochemical demand in China and Saudi Arabia until 2007, has led to the view that the oil market is tighter than previously thought, increasing the argument that OPEC should try to increase production faster.

One of the sources said that Saudi Arabia did not agree with the reassessment.

The IEA said the disruption caused by the epidemic made it very difficult to obtain accurate statistics and released its correction as soon as the information was available.

“The IEA noted the inconsistency in some of the observed and implicit cargo changes for some time and the revision in our historic oil demand estimates attached in the February report went some way to closing that gap,” it said.

The IEA’s forecasts of the impact of sanctions on Russian production have drawn criticism from within the OPEC as it is designed to press the case for an increase in OPEC output, sources said.

The IEA has said that Russian oil production is likely to fall by 3 million ppd from April, while trading companies such as Vitol and Trophigura have predicted that Russian oil exports will fall by 2-3 million ppd. According to analyst estimates and Russian data, Russian oil production in early April was less than 1 million pt.

“Based on the reports of several companies that we have already announced our initial assessment of exports, we have announced a reduction or reduction in the purchase of Russian oil, but we have indicated greater interest in offset barrels,” the IEA said.

“As we have pointed out, in the light of rapidly evolving circumstances, the assessment is under continuous review and will be revised as necessary.”

OPEC + has so far resisted calls from the United States and the IEA, the highest level in 14 years since Western sanctions on Moscow, which Russia describes as its “special forces” following the February 24 invasion of Ukraine. Function “.

Saudi Arabia and the United Arab Emirates, which have the most spare capabilities within the OPEC, said OPEC + should stay out of politics and hit the group’s previously planned moderate monthly increase at a monthly meeting in late March.

President Biden and his allies are of the opinion that more supplies are needed to bring down prices. The United States has announced plans to release up to 180 million barrels of oil from its Strategic Petroleum Reserve (SPR).

The IEA said last week that it plans to release 120 million barrels of oil in six months. read more

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Report by Maha El Dahan, Dmitry Zhtanikov, Alex Lawler, Ahmed Kader, Rowena Edwards; Additional Reporting by Noah Browning and Richard Waltmanis; Editing by Simon Webb and Barbara Lewis

Our Standards: Thomson Reuters Trust Principles.

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