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Saudi Arabia Commodities August 2023

Saudi Arabia: OPEC production rises in August; OPEC oil prices rise to 9-month high

The OPEC oil basket traded at USD 87.3 per barrel on average in August, a 9-month high and up 7.7% from the prior month. The rise was one of the sharpest since the onset of Russia’s invasion of Ukraine and was driven by seasonal demand and lower OPEC output. Meanwhile, on 31 August, the price was 7.0% higher year to date and 14.3% lower year on year.

OPEC pumped 27.56 million barrels per day (mbpd) of crude oil in August, up 0.22 mbpd from July, according to a survey by Reuters. This mostly reflected higher output in Iran, which benefitted from the U.S. unofficially loosening restrictions on the country’s exports. In contrast, Saudi Arabian output fell by 0.01 mbpd in August to 9.01 mbpd. This marks one of the lowest levels in the past decade and follows the country’s unilateral 1.00 mbpd production cut in effect since July.

Crude output will remain weak ahead in Saudi Arabia. The government has committed to extending its 1 mbpd cut until at least September, with an extension until at least October likely. That said, the cut should help put a floor under crude prices, helping to bolster the public coffers and thus supporting government spending.

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