Opec mulls removing IEA as secondary source: Correction

Corrects to clarify the Opec+ has removed the IEA

Opec+ has removed Paris-based energy watchdog the IEA from the panel of "official" secondary sources that monitor the group's monthly crude production.

The group's Joint Technical Committee (JTC) yesterday made the decision based on what one source familiar with the thinking said was unreliable data.

"The reason [for the change] is that the IEA have compromised their technical analysis to fit their narrative," the source said. "This is evident when observing the frequent changes in their recent reports and how far they deviate from the other respected agencies."

One such instance came in February when the agency made significant revisions to its current and historic oil demand figures, the source said, weeks after highlighting what it saw as "a growing discrepancy between observes and calculated stock changes."

A second source pointed to several moments "over the past two years" that have eroded the Opec+ group's trust in the IEA's numbers.

The IEA, for its part, has been critical of Opec+ recently, saying it is not doing enough to help tackle high energy prices. Earlier this month IEA executive director Fatih Birol described the group's decision to stick with a 400,000 b/d increase in its April crude quota as "disappointing".

Opec+ has replaced the IEA as a secondary source with consultancies Wood Mackenzie and Rystad Energy, which join Argus, the US' EIA, S&P Global Platts, IHS Markit and Energy Intelligence. The Opec+ group calculates the production quota compliance of individual members by averaging the output estimates of the independent sources.

Sources say that Opec, which has long used secondary sources to assess its monthly production, is likely to follow suit by removing the IEA, but this is yet to be confirmed.

Opec+ has not yet veered from the roadmap it agreed in July last year, opting to limit its production quota increases to 400,000 b/d each month and resisting pressure from outside the group for bigger hikes. Opec+ ministers have repeatedly defended the policy, arguing that high oil prices are being underpinned by geopolitical sentiment rather than market fundamentals, and that underinvestment and dwindling capacity are hampering the coalition's ability to raise output.

Ministers are likely to once again stick to the script when they meet later today to discuss production policy for May, although the monthly increase will be larger at 432,000 b/d as five countries in the group enjoy an upward revision to their base production levels, on which their quotas and compliance levels are determined.

The IEA and the Opec Secretariat have not yet responded to requests for comment.

By Nader Itayim