The war in the Middle East and the Russia-Ukraine war have disrupted oil supply from two of the world’s major producers, pushing Saudi Arabia’s crude supply to its lowest level in more than three decades and Russia’s crude oil production to its lowest level since 2003.
Disruptions to oil flows through the Strait of Hormuz and alternative export routes following the outbreak of war in the Middle East have made it more difficult for Saudi Arabia to bring its crude to international markets, while Ukrainian attacks on Russia’s energy infrastructure have added pressure on the country’s oil production and exports.
Data from the International Energy Agency (IEA) show that Saudi Arabia’s crude supply fell by 2.27 million barrels per day (bpd) in August from the previous month to around 5.97 million bpd, its lowest level in more than 30 years.
The decline came as disruptions to oil flows through the Strait of Hormuz and attacks on Saudi oil facilities and alternative export routes constrained the country’s ability to move crude to global markets.
The IEA’s estimate of Saudi Arabia’s crude supply, at around 5.97 million bpd in August, differs from the 7.12 million bpd figure reported by Saudi Arabia to the Organization of the Petroleum Exporting Countries (OPEC). The kingdom reported crude oil production of around 6.24 million bpd for the same month.
The distinction is important because supply and production measure different aspects of the oil market. Supply reflects the volume made available to the market and can differ from production because of changes in exports, domestic refinery use, and other flows, including stock movements.
In February, when the US-Iran war began, Saudi Arabia’s crude supply was above 10 million bpd.
– Stocks and alternative routes reflect disruptions
Saudi Arabia initially sought to redirect some of its crude exports through the East-West Crude Oil Pipeline to the Red Sea port of Yanbu after flows through the Strait of Hormuz were disrupted.
According to the IEA, crude exports from Yanbu rose from around 2 million bpd before the war to more than 5 million bpd in early June. However, Houthi attacks in the Red Sea subsequently constrained flows along the alternative route, with Saudi crude exports through Yanbu falling to around 2.5 million bpd in August.
The country’s export capacity came under further pressure in early September after attacks forced the East-West Crude Oil Pipeline offline.
Saudi Arabia’s oil stocks also fell by 12 million barrels in August. The drawdown largely reversed the increase recorded in July, when part of the country’s crude exports had been constrained by disruptions to shipping through Bab el-Mandeb, with some barrels stored domestically or diverted to Egypt.
The stock movement provides another indication of the pressure on Saudi Arabia’s ability to move crude into international markets as disruptions persisted along its main and alternative export routes.
– Ukraine attacks put pressure on Russian oil
In Russia, the impact of the war with Ukraine has been more visible in production data.
IEA data show that Russia’s crude oil production fell by 200,000 bpd month on month in August to 8.36 million bpd, its lowest level since 2003. The decline came as Ukrainian attacks on Russia’s energy infrastructure, including refineries, disrupted the country’s oil sector.
OPEC’s August estimate differs from the IEA’s figure. OPEC put Russian crude oil production at around 8.72 million bpd, down around 160,000 bpd from July. Moscow stopped publishing its own oil production data in April 2023.
The impact of attacks was also reflected in Russia’s crude exports. The country’s crude exports fell by around 330,000 bpd in August from the previous month to about 5.18 million bpd.
The decline was driven by lower seaborne crude exports, which fell by around 380,000 bpd month on month to 3.78 million bpd. Black Sea loadings were particularly affected, falling from around 710,000 bpd in July to approximately 300,000 bpd in August.
