Saudi Arabia: Oil output falls to lowest since Gulf War in April
Latest reading: Brent crude oil prices averaged USD 102.81 per barrel in April, up 3.4% from March. On 30 April, the commodity traded at USD 114.15 per barrel, down 3.5% from 31 March.
Turning to production, Saudi oil output was 6.77 million barrels per day (mbpd) in April, decreasing 24.8% year on year (March: 7.73 mbpd; down 13.8% yoy). This marked the lowest oil production level since the Gulf War in 1990 and the sharpest year-on-year contraction in five years. Since the closure of the Strait of Hormuz, Saudi Arabia has cut production by around a third of its pre-war levels, primarily by shutting down the Safaniya and Zuluf offshore fields.
Outlook: Over the past few months, the Iran conflict has weakened Saudi Arabia’s outlook for oil production, which is projected by our panel to fall this year from last. Still, the country’s oil sector remains better insulated from the conflict than most other Gulf states. By rerouting exports to the port of Yanbu, the Kingdom has partially offset losses from the Hormuz blockade. The Kingdom should also benefit from historically high oil prices.