OPEC's oil output has experienced a considerable decline, primarily due to the ongoing Middle East conflict that has severely impacted Saudi Arabian oil production and exports. The conflict has led to attacks on Saudi energy facilities near the Yemeni border, halting operations and wounding several individuals. These attacks, along with heightened tensions in the Strait of Hormuz and the Red Sea, have resulted in Saudi oil exports plummeting to roughly 3 million barrels a day in August, a near-decade low according to Bloomberg, Vortexa, and Kpler.
Despite the significant supply disruptions, Brent crude futures, while rising to $97.34 a barrel, have remained below the $100 mark. Analysts attribute this to several factors, including the continued, albeit disrupted, flow of significant volumes through the Strait of Hormuz. For instance, in the week before fighting reignited on August 30, roughly 8 million to 9 million barrels per day had been flowing through Hormuz, double the previous week's volume.
The conflict has forced Saudi Arabia to adjust its export routes, with some customers now reluctant to use Red Sea ports due to attacks by Houthi militants. This has led to longer voyages around Africa, adding to supply chain strains. Kuwait has managed to rebound its oil exports to about 1 million barrels a day, utilizing ship-to-ship transfers outside the Strait of Hormuz to navigate disruptions. Goldman Sachs has raised its December 2026 Brent view to $85 and WTI outlook to $80, while Marex expects crude prices to remain elevated through year-end.
