Saudi Arabia's export routes are facing mounting pressure, with persistent attacks from Yemen's Houthi rebels adding to the strain, causing OPEC's crude production to slide back into decline in August after two consecutive months of recovery. Brent crude futures are now hovering near the $100 per barrel threshold.
According to Bloomberg data, OPEC's average daily crude output fell by 900,000 barrels month-on-month in August, landing at 19.91 million barrels. Saudi Arabia saw the steepest single-month drop, with production down more than 1 million barrels, while modest increases from Iraq and Venezuela could only partially offset the losses.
Meanwhile, the Houthi group claimed responsibility for a fresh round of strikes on Saudi targets on Tuesday, forcing Riyadh to shut down several energy facilities in the south. Iran also reported that US missiles struck a tanker near Kharg Island and issued warnings about potential attacks on tankers at Kuwaiti and Bahraini ports. Brent crude climbed 2.4% on Tuesday, breaking through the $99 mark.
On the Venezuela front, the United States has announced it will take majority control of significant oil assets in the country, and Caracas is now closely evaluating the possibility of leaving OPEC. This development comes just months after the UAE's dramatic exit, deepening internal fractures within the cartel and adding further uncertainty to the crude market outlook.
Saudi Output Falls to Five-Month Low, Exports Plunge by One-Third
According to a Bloomberg survey, Saudi Arabia's crude production dropped by 1.12 million barrels per day in August to 6.98 million barrels, marking the lowest level since May this year.
The kingdom's export struggles stem from two directions: escalating tanker attacks in the Strait of Hormuz have disrupted shipments from the Persian Gulf, while threats from Yemen's Houthi rebels have also blocked the Red Sea route that serves as a backup channel for Saudi exports.
Based on preliminary tracking data compiled by Bloomberg, Kpler, and Vortexa, Saudi Arabia's observable crude exports tumbled by roughly one-third to 3.03 million barrels per day.
This situation reflects the unresolved consequences of the six-month diplomatic standoff between Washington and Tehran. OPEC's production had partially recovered in June and July using the Persian Gulf corridor, but the latest decline indicates that conflict-related disruptions to actual supply are still ongoing.
Iraq and Venezuela Post Modest Gains, But Overall Trend Remains Weak
In contrast to Saudi Arabia, Iraq increased its daily output by 270,000 barrels in August to 2.98 million barrels, while Venezuela added 70,000 barrels to reach 1.23 million barrels per day—a seven-year high, with the latter linked to increased US oversight of the country's oil sector.
However, the gains from these two nations are far from sufficient to compensate for the massive drop in Saudi production, leaving OPEC's overall output with a significant contraction.
Late last month, former President Trump announced that the US would secure majority control of a substantial portion of Venezuela's oil wealth. According to sources familiar with the matter, Caracas is seriously assessing the possibility of exiting OPEC, coming just months after the UAE announced its departure from the organization.
These developments are putting pressure on OPEC's overall cohesion. Venezuela's tilt toward Washington creates tension with the cartel's traditional collective decision-making framework, and the alliance's internal solidarity is being tested.
OPEC+ Holds October Output Targets, Production Capacity Audit Becomes Next Focus
Over the weekend, the OPEC+ ministerial committee agreed to maintain its October production targets, continuing the direction set after a series of symbolic output increases.
Those increases nominally completed the reversal of the 2023 production cuts, but the blockade in the Strait of Hormuz has hampered actual output gains.
The alliance's next priority is an audit of member countries' actual production capacity, with results to be used in setting each member's output ceiling for 2027. The audit must be completed by the end of this month, after which it will be submitted for review by member oil ministers at their meeting in late November.
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