Saudi Arabia's oil production plunged last month as threats by Iran-backed Houthi rebels disrupted exports from the kingdom's west coast, at a time when shipments through the Strait of Hormuz waterway in the Persian Gulf remain constrained.
Riyadh's output tumbled by roughly 1.9 million barrels a day to 6.24 million barrels a day in August, down 23% from July levels, according to the latest data from the Organization of the Petroleum Exporting Countries. The country is OPEC's largest producer and the world's biggest oil exporter.
Soon after the war started in late February, Saudi Arabia began diverting flows through the East-West pipeline, a roughly 750-mile system that transports crude from the eastern oil fields and processing centers near the Gulf to the port of Yanbu on the west coast.
But at the end of July, Yemen's Houthi rebels declared a blockade of Saudi Arabia's nearby ports and began a series of attacks on shipping in the Bab al-Mandeb strait, which links the Red Sea to big Saudi oil markets in Asia. Saudi and Yemeni officials said the Houthis are now nearing complete control of the coast along Bab al-Mandeb.
Crude production among OPEC members rose by just 346,000 barrels a day to 24.08 million barrels a day in August, driven by a sharp increase in Iraqi output. Iranian production instead fell by 399,000 barrels a day to 2.1 million barrels a day, according to OPEC's data, as a U.S. naval blockade strangled the regime's shipments from the Gulf.
OPEC once again cut its forecast for global oil-demand growth for this year, just as oil prices soar past $100 a barrel. The group of oil-rich countries expects global demand to grow by 380,000 barrels a day, down from 580,000 barrels a day previously.
Next year's demand growth is now seen at 2.36 million barrels a day, up from a previous estimate of 2.16 million barrels a day.
The closely watched monthly report came after Brent, the global oil benchmark, surpassed $100 a barrel this week for the first time since July as escalating U.S.-Iran clashes and renewed Houthi strikes on Saudi Arabia deepened fears of prolonged supply disruptions. The prospect of a drawn-out war is also fueling concerns over energy-driven inflation, with higher fuel costs threatening to feed through to households, businesses and the broader economy.
In early U.S. trading on Thursday, Brent climbed 3.8% to $105.06 a barrel, while West Texas Intermediate futures gained 3.7% to $99.60 a barrel after topping $100 earlier in the session. Both benchmarks have risen more than 20% this month.
Before the war, the Strait of Hormuz--a critical artery for global energy markets--used to carry roughly a fifth of the world's oil and liquefied natural gas supplies to international buyers. It remains difficult to gauge how much crude is still moving through the waterway, as some tankers are crossing with their transponders switched off. But with vessels continuing to face the threat of attacks, energy flows through the strait remain highly uncertain.
Earlier this month, key members of the OPEC+ alliance agreed to keep output stable in October after six straight monthly increases as the broader group reviews members' production capacity baselines for future quotas. The war, however, could test the group's cohesion if producers seek to increase output beyond their targets, according to analysts.
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