Despite its pledge to boost crude oil supply to offset supply disruptions, Saudi Arabia’s oil production in July slipped by 52,800 bpd from June to average 10.387 million bpd last month, according to the secondary sources in OPEC’s closely watched Monthly Oil Market Report published on Monday.
The Saudis themselves reported an even lower production number, at 10.288 million bpd, Saudi Arabia self-reported to OPEC that its crude oil production dropped by 200,500 bpd from the production it had reported for June.
OPEC looks at the secondary sources production figures when it calculates compliance and quotas.
Over the past two weeks, there were contradicting numbers about Saudi oil production, with many polls predicting that OPEC’s biggest producer had likely pumped at near record-high levels, while Saudi and OPEC sources claimed that production actually dropped and was nowhere close to records.
According to the Financial Times, one reason for the lower production in July was that Saudi Arabia didn’t see demand for its crude oil as high as it had expected earlier.
In the middle of July, Saudi Arabia’s OPEC governor Adeeb Al-Aama said that the Kingdom would see its July exports drop by around 100,000 bpd as it was unwilling to push the market into oversupply beyond the customers’ needs.
In today’s report, OPEC revised down demand for the cartel’s crude oil for next year, and revised slightly down its estimates for global oil demand growth compared to the previous month’s report.
Demand for OPEC-15 crude for 2019 was revised down by 100,000 bpd from the previous MOMR to stand at around 32.0 million bpd, which would be 800,000 bpd lower than the 2018 level.
Oil demand growth for this year is now seen at 1.64 million bpd, or 20,000 bpd lower than last month’s projections, mainly due to weaker-than-expected oil demand data from Latin America and the Middle East in Q2. For 2019, global oil demand is forecast to grow by 1.43 million bpd, also around 20,000 bpd lower than last month’s forecast.
Non-OPEC oil supply in 2018, on the other hand, was revised up by 73,000 bpd from the previous MOMR to average 59.62 million bpd, representing an increase of 2.08 million bpd year on year. Related: IEA: The World Needs More Diverse Cobalt Sources
Looking ahead, OPEC sees “numerous challenges” emerging amid the relatively strong global economic growth trend.
“The main areas of concern include political uncertainties. Among these, it is trade-related developments in particular that warrant close monitoring in the near-term. The forecast considers that there will be no significant rise in trade tariffs and current disputes will be resolved soon,” OPEC said.
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“Rising trade tensions, leading to mounting uncertainties, translating into falling business and consumer sentiment, may provide a significant downside risk to the current relatively positive outlook.”
By Tsvetana Paraskova for Oilprice.com
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