Saudi oil output plunges to lowest since 1990 – Bloomberg
Saudi Arabia’s crude oil production plunged by nearly 2 million barrels per day in August to its lowest level in over 35 years, as conflicts across the Middle East squeezed the kingdom’s export routes, Bloomberg reported on Thursday.
Riyadh told OPEC that production fell by 1.9 million barrels per day last month to 6.238 million bpd, according to the group’s monthly report obtained by the outlet.
The figure marks a new low since the US and Israel launched strikes against Iran in late February, as well as the kingdom’s lowest production level since the beginning of the Gulf War in 1990.
Saudi Arabia has been caught between disruptions on both of its principal maritime export routes. Traffic through the Strait of Hormuz has been severely restricted amid the ongoing US-Iran conflict, forcing greater reliance on Red Sea routes.
Iranian-aligned Houthi forces in Yemen have also renewed the war against Saudi-backed government forces and declared a maritime blockade against the kingdom.
The Houthis have also directly targeted Saudi energy infrastructure. A missile and drone barrage on Tuesday set oil installations ablaze and forced operations at some facilities to stop, according to the Saudi authorities, although Riyadh has provided few details on the extent of the damage or its impact on production.
The Houthis reportedly seized the strategic port city of Mocha on Thursday, tightening their grip on the approaches to the Bab al-Mandeb Strait – the narrow southern entrance to the Red Sea and a critical route for Saudi oil exports. The group said navigation remains safe for other shipping but not for Saudi vessels.
The pressure is already visible in shipping data, as provisional tanker tracking compiled by Bloomberg shows Saudi crude exports falling by around a third in August.
Riyadh told OPEC that its “supply to market,” which includes crude drawn from storage, stood at 7.122 million bpd, suggesting that the kingdom tapped inventories to compensate for reduced production. OPEC’s separate estimate based on external secondary sources was substantially higher, putting Saudi output at 7.276 million bpd in August.
The mounting threats to both Hormuz and Bab al-Mandeb have sent oil prices surging higher. Brent crude settled 6.3% higher at $107.63 a barrel on Thursday, while West Texas Intermediate jumped to $102.48, with both benchmarks reaching their highest levels since May.
The upheaval is already reshaping global energy flows. Russia launched the first shipment from its massive Vostok Oil project in the Arctic this week, opening a new export route via the Northern Sea Route which Rosneft says could eventually supply the equivalent of around 730 million barrels of oil annually.
The US, meanwhile, has secured majority control over more than 65 billion barrels of Venezuela’s proven oil reserves under a sweeping investment deal. President Donald Trump portrayed the oil as a “gift” that will help replenish America’s Strategic Petroleum Reserve.
Those additional supplies could eventually ease pressure on global markets. The immediate shock, however, is already reaching US consumers. The national average diesel price surpassed $6 a gallon for the first time on record on Thursday, according to GasBuddy, after rising nearly 60% since the US and Israel launched the war against Iran in late February.
