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Saudi Arabia Commodities February 2024

Saudi Arabia: Saudi crude output stays soft in February; Brent prices recover

Brent crude oil prices averaged USD 81.80 per barrel in February, up 3.4% from January. On 29 February, the commodity traded at USD 83.78 per barrel, up 2.3% from 31 January. Market concerns about supply likely drove the rally, with OPEC+ continuing to curb output and tensions in the oil-producing Middle East region continuing.

Turning to production, Saudi oil output rose marginally to 8.98 mbpd (million barrels per day) in February from January’s 8.96 mbpd, remaining at one of the lowest levels in the past decade.

After falling 8.6% last year, Saudi crude output is projected to slip further in 2024, albeit at a softer pace. Before, our panelists had projected an expansion, but the Kingdom’s recent commitment to prolonging its unilateral 1.0 mbpd cut until the end of Q2 2024 has dimmed expectations of growth. This is separate from OPEC+ production curbs in place since June 2023 that are due to last until the end of 2024.

Looking further ahead, oil production is set to recover to near peak levels in 2025 as production curbs are rolled back. That said, the recovery ahead is set to be less strong than initially anticipated by the market—the national oil firm Aramco abandoned its plan to raise capacity to 13.00 mbpd from 12.00 mbpd by 2027 in January as the government seeks to diversify the economy.

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