OPEC’s oil output hit an all-time record in July at 32.8Mbd, due to higher volumes from Saudi and Iran. The Saudi increase to 9.55Mbd was in line with their pledge at the Jeddah summit in June to raise output to 9.7Mbd. But the Iranian increase appears to have been a one-off, as the country sold off stockpiles that had been built up whilst refineries underwent seasonal maintenance. And on the demand side, Chinese consumption continued to boom, rising above the 8Mbd level for the first time to reach 8.3Mbd in June.
According to the International Energy Agency’s latest monthly report, some demand destruction is now taking place in Western countries, as a result of higher oil prices. It notes that ‘even if retail prices ease, it seems unlikely that motorists who have purchased smaller cars will revert to gas-guzzling vehicles’. But the IEA still expects global demand to grow by 790kbd this year, as emerging countries and OPEC continue to subsidise domestic oil product prices.