Increase in OPEC Production.. and Saudi Arabia Boosts Its Oil Exports

SadaNews - The Organization of the Petroleum Exporting Countries (OPEC) has increased its crude oil production at the highest pace in four months, with Saudi Arabia leading the increase in oil exports from the Middle East to regain its market share, according to a survey conducted by Bloomberg.

Riyadh is guiding its partners in the OPEC+ alliance towards a rapid resumption of supplies, despite a slowdown in global demand and the looming possibility of a surplus in supply. This policy contributes to increased pressure on crude oil prices, which is favorable for consumers and aligns with the wishes of President Donald Trump.

Saudi Arabia, along with the UAE and Kuwait, also accelerated oil shipments in June, amid fears that the escalation between Israel and Iran could threaten the flow of supplies through the Arabian Gulf and the vital Strait of Hormuz. However, despite this, shipping remained stable with little disruption.

The Bloomberg survey revealed that OPEC's production rose in June by 360,000 barrels per day, reaching an average of 28 million barrels per day. Saudi Arabia was responsible for about two-thirds of this increase.

Expanding Oil Production

The broader OPEC+ alliance has shifted its policy in recent months from defending prices to increasing production. Member countries agreed to implement voluntary supply reductions in May, June, and July at three times the previously scheduled pace. Member states are expected to discuss an additional increase of 411,000 barrels per day during a video conference scheduled for Sunday.

The recent increase reflects a broader commitment from member countries to accelerate the pace of supplies, especially after some countries expressed caution in May while trying to compensate for previous production surpluses.

However, this expansion in supply coincided with weak demand in China and ample oil flows from the Americas, casting a shadow over prices. Futures contracts for Brent crude fell to around $67 per barrel on Wednesday, after a 12% decline last week as fears of export disruptions eased due to a fragile truce between Israel and Iran.

The Bloomberg survey indicated that Saudi Arabia raised its production by 240,000 barrels per day in June to reach 9.37 million barrels, in line with its new target. The UAE, Kuwait, and Iraq also contributed to the increase in production, with Abu Dhabi achieving the second-largest monthly increase by adding 90,000 barrels per day to reach 3.4 million barrels. Meanwhile, Iraq raised its production by 30,000 barrels per day to reach 4.21 million barrels.

Highest Exports in Two Years

Data from Bloomberg shows that the UAE and Iraq are producing amounts that exceed their official quotas within OPEC+, while the organization's estimates indicate that their production levels remain within announced commitments.

The two countries belong to a group of members that have pledged to impose additional production restrictions to compensate for previous overproduction. Kazakhstan remains the furthest from its designated quota.

Saudi Arabia, the UAE, and Kuwait recorded a significant jump in exports in June, potentially aimed at repositioning supplies away from regional hotspots. Data tracking oil tankers showed that the three countries shipped 11.9 million barrels per day, the highest level in over two years.

The discrepancy between the quantities produced and exported suggests that a portion of inventories may be used to meet the increasing shipments. The Bloomberg production survey relies on vessel tracking data, information from official sources, and estimates from consulting firms including Rystad Energy, FGE, and Kpler.

Source: Bloomberg