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Saudi Arabia reports oil outputs soared to their highest levels in months despite continued shipping disruptions.
Saudi Arabia has boosted crude outputs to their highest levels since before the Iran war disrupted supplies in February, triggering a global energy and shipping crisis.
An OPEC report issued on Wednesday said the world’s biggest oil exporter pumped 10.563 million barrels per day (bpd) of crude in October, up by over two million bpd from its September output.
That is the highest level since the United States and Israel launched the war on Iran in late February, when Saudi Arabia produced 10.882 million bpd.
Rising oil production by Saudi Arabia and Russia helped increase outputs for the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and other nations including Russia.
OPEC+ pumped 41.23 million bpd in October, up by about 2.04 million bpd from September, according to its monthly report. Russia’s output increased as US President Donald Trump lifted sanctions on Russian energy and announced an “energy ceasefire” between Ukraine and Russia in mid-October.
Riyadh sharply increased its production in February ahead of US and Israeli strikes on Iran.
Saudi Arabia’s reported increase in oil production “could help ease some of the inflationary pressure facing American consumers”, Umud Shokri, an energy strategist and senior visiting fellow at George Mason University, told Al Jazeera.
“When more oil enters the global market, prices generally come under downward pressure, which can eventually translate into lower gasoline, transportation, and production costs in the United States,” he said. “However, higher Saudi production does not automatically mean lower prices at American gas stations.”
While US prices for petrol or gasoline fell below $4 a gallon for the first time in months this week, concerns over the stubbornly high cost of living drove the Democratic Party’s sweeping victories in US midterm elections last week.
Inflation has spiked since February, when it stood at 2.9 percent. Annual personal consumption expenditures (PCE) shot to a three-year high of 4.1 percent in May, when energy prices soared as the conflict closed off roughly one-fifth of global oil supplies transiting through the Strait of Hormuz.
Other producers managed to regain their supply positions, including the US.
However, the report noted a decline in imports by one of the world’s largest economies – Japan – where “crude imports fell sharply in September amid renewed disruptions to trade flows”.
The report data, while based on secondary sources, indicate that Gulf oil producers are recovering exports by using workarounds such as ship-to-ship transfers to bypass disruptions caused by the conflict.
“The UAE regained its position as the top supplier in September with a share of 49 percent, compared with 25 percent the previous month. The US was second with 28 percent, followed by Saudi Arabia with 14 percent,” the OPEC report noted.
The report indicated that Saudi Arabia’s exports have stabilised despite a secondary oil supply route – Saudi’s East-West Pipeline – coming under attack by Houthi rebels in neighbouring Yemen. The Houthis, who are fighting the Saudi-backed internationally recognised government in Aden, continued to target the pipeline this week.
Shokri explained that “one reason Saudi Arabia has been able to recover some of its exports is its East-West Pipeline, which allows crude oil to move across the country to the Red Sea port of Yanbu without passing through the Strait of Hormuz”.
While no longer an OPEC member, the United Arab Emirates remains a major supplier and “has a similar advantage through its pipeline to Fujairah, located outside the strait”, he said.
“The bigger picture is that Gulf countries are learning how costly dependence on a single maritime chokepoint can be,” Shokri warned. “They are looking for ways to make their exports more resilient, but Hormuz remains too important to the global energy market to be easily bypassed.”
Oil output in October was equivalent to 97 percent of the 42.72 million bpd produced by OPEC+ in February, according to Reuters.
OPEC left its forecasts for global oil demand growth unchanged after cutting them for six straight months, and made no changes to its 2027 outlook.
The producer group expects global oil demand to rise by 2.55 million bpd next year to an average of 108.3 million bpd. It forecasts growth of 180,000 bpd in 2026.
The report also forecasted that Qatar, Canada, Brazil and Argentina will drive growth in energy-related liquids production in 2027.
The report offered an optimistic outlook for the Middle East’s economic performance in the near term.
“In 2027, the region’s economy is expected to rebound and economic activity to recover, supported by a resilient non-oil sector and robust domestic demand,” it said.