After Opec+ decided last week to accelerate the pace of production increases, Saudi Arabia’s production cap is set to rise by 170,000 b/d in both July and August, taking it up to 11mn b/d (MEES, 3 June). But the increases coincide with soaring temperatures in the kingdom which typically force it to massively ramp up the amount of oil burned in power plants as electricity demand spikes. Past precedent suggests this could offset a large chunk of the production increases, minimizing their impact on global markets.
This dynamic is much more pronounced in Saudi Arabia than other Opec+ GCC states. The UAE’s power generation feedstock is traditionally overwhelmingly gas, and this has now been supplemented by solar and nuclear (MEES, 4 March). Oman too has supplemented gas with solar (MEES, 12 November 2021), with Kuwait the only other major oil burner. With Kuwait importing record volumes of LNG through its new Al Zour terminal, oil burn should be more manageable this year (MEES, 3 June). (CONTINUED - 869 WORDS)
