Saudi Arabia produced only about 6.3 million barrels of oil per day in April. For the country, this is almost an emergency level. The only time it was lower was in 1990, when the region was hit by the Gulf War.
The conflict around Iran continues to disrupt supplies through the region. Against this backdrop, production fell by another approximately 651,000 barrels in a month.
Since February, the drop has already reached 42%. The Saudi oil industry has not seen such a steep decline in decades.
OPEC Loses Production Across the Region
In April, OPEC countries cut oil production by about 1.727 million barrels per day. As a result, the total output dropped to 18.98 million barrels per day.
Almost half of the decline was due to the Saudis.
Kuwait also saw a serious drop. Now Kuwait produces about 600,000 barrels of oil per day, almost half as much as before.
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Supply issues through the Persian Gulf have also affected Iraq and UAE.
Riyadh meanwhile stated that the amount of oil sent to the market was 6.879 million barrels per day. This does not include volumes sent to storage.
Analysts’ estimates differ slightly. Financial Post reports that production could have been closer to 6.768 million barrels per day.
UAE’s Exit Adds Chaos to the Market
Additional pressure is coming from the situation with the UAE. Last month, the country announced it plans to leave OPEC after nearly 60 years of participation.
There had been talk about this for a long time. UAE and Saudi Arabia have been arguing for years over quotas and influence within the cartel.
Although officially the country will remain in OPEC until 2027.
After the war began, the Emirates started to restructure oil supply routes to reduce dependence on the Persian Gulf.
Saudi Arabia also partially redirected exports through the Red Sea. Kuwait has almost no such flexibility. Hence the more serious losses.
Fuel Prices Begin to Rise Amid Disruptions
The market is nervous again because of the economy. OPEC has already lowered its forecast for oil demand growth in 2026. Now they expect weaker figures than before.
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The International Energy Agency’s estimates are even worse. They do not rule out that oil demand could end up negative for the year.
Something similar already happened in 2020, when the pandemic caused a sharp drop in the economy and fuel consumption.
There is also no progress in negotiations between the US and Iran . The parties have been at a standstill for a long time.
If all this drags on, oil could come under even more pressure. Especially in light of the UAE’s exit from OPEC.
