Oil production nears pre-Iran war levels, OPEC says
Saudi Arabia has raised its crude oil production to its highest level since before the Iran war disrupted supplies in February, according to a new report.
The Organization of the Petroleum Exporting Countries (OPEC) reported that Saudi Arabia pumped 10.563 million barrels per day (bpd) of crude in October, the highest level since the United States and Israel launched the war on Iran in late February.
The surge in production is a direct response to the global energy crisis triggered by the conflict in the Middle East.
The OPEC+ group, which includes OPEC and other major producers like Russia, pumped a total of 41.23 million bpd in October, up by about 2.04 million bpd from September.
Rising output and easing prices
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. This policy shift has further bolstered global oil supplies.
Saudi Arabia’s reported increase in oil production 'could help ease some of the inflationary pressure facing American consumers'.
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.
Supply routes and regional challenges
The OPEC 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'.
Despite these challenges, Gulf oil producers are recovering exports by using workarounds such as ship-to-ship transfers to bypass disruptions caused by the conflict.
The United Arab Emirates 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 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'.
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