Saudi Arabia Boosts Crude Oil Exports by 413,000 Bpd in August

Saudi Arabia’s crude oil exports experienced a significant increase of 413,000 barrels per day (bpd) in August 2023, reaching the highest level seen in six months. This surge comes as the world’s largest crude exporter, along with the OPEC+ group, accelerated the reversal of prior production cuts. In addition to the rise in exports, Saudi Arabia’s crude oil production also saw a notable boost, climbing by 521,000 bpd from July, according to data released by the Joint Organizations Data Initiative (JODI).

Refinery activity within Saudi Arabia diminished during the same period, with runs dropping by 76,000 bpd month-on-month in August. This reduction in refinery output allowed for an increased volume of crude oil available for export. Anticipating peak demand from key markets like China, Saudi Arabia’s crude shipments were projected to reach a two-year high last month.

The demand for Middle Eastern crude saw a marked increase among Asian buyers this summer. Following the Israeli-Iran conflict in June, which elevated spot price premiums, buyers opted for term deliveries from Middle Eastern producers. This shift made the official selling prices of Saudi crude more attractive compared to those in the spot market.

Looking ahead, Saudi crude exports might have risen even further in September. OPEC+ members collectively increased their production by 630,000 bpd from August, completing the unwinding of the 2.2 million bpd production cuts initiated in April. OPEC-only production also rose by 524,000 bpd, reaching 28.44 million bpd, largely driven by the output increase from Saudi Arabia, the cartel’s largest oil producer.

In September, Saudi Arabia raised its crude production to 9.961 million bpd, an increase of 248,000 bpd compared to August. Despite these production and export enhancements, there are concerns in the market regarding potential weakening in global demand following the summer peak. Analysts fear this could lead to an oversupply in the coming weeks. Additionally, there are worries that Saudi Arabia is reducing its spare production capacity, which could expose oil prices to volatility in the event of a sudden supply shock.

As the global oil market continues to navigate these dynamics, the actions of Saudi Arabia and OPEC+ will play a pivotal role in shaping future price movements and supply stability.