Sustainability-linked loan issuance in the…
Hungarian Prime Minister Viktor Orban…
Direct crude and product burn at power generation plants in the two largest OPEC producers has accelerated as the summer approaches, which could leave lower available crude supply for international markets, analysts say.
So far this year, oil-fired power generation has rebounded to meet strong power demand, commodity analyst Giovanni Staunovo said on Wednesday, citing data from the International Energy Agency (IEA).
In Saudi Arabia and Iraq, OPEC’s largest and second-largest oil producer, respectively, burning of fuel oil and direct crude oil use for power generation jumped by 270,000 barrels per day (bpd) in April compared to March, Staunovo added.
Saudi Arabia, the world’s largest crude oil exporter, relies on crude and fuel oil for electricity generation and cranks up direct crude and fuel burns during the scorching summer months.
After OPEC+ decided to accelerate the rollback of the cuts and have those completely unwound by the end of August, some analysts pointed out that the direct crude burn in Saudi Arabia’s power plants could consume a large part of the increase in production.
The higher OPEC+ production targets for the months of July and August coincide with the peak summer heat in Saudi Arabia, which typically increases significantly the volumes of crude and products burned at power plants.
At the same time, the ten OPEC producers in the OPEC+ pact pumped 24.8 million bpd of crude oil in June, OPEC data showed on Tuesday, with production falling 1 million bpd short of the target levels.
Saudi Arabia naturally raised its crude oil production by the most in June compared to May. Yet, per OPEC’s secondary sources, even the Saudis were lagging behind their quota for June. Saudi Arabia’s oil production rose by 159,000 bpd to 10.585 million bpd, OPEC said. To compare, the Saudi target was 10.663 million bpd, so the Kingdom was 78,000 bpd below its quota last month using secondary source figures. But Saudi Arabia self-reported to OPEC that its production figures were indeed in line with its target—10.646 million bpd.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.