The Kingdom’s crude oil production increased to 8.135 million bpd from June’s ratio of 7.122 million bpd. However, the JODI website, which displays monthly export data for OPEC member countries, stated that Saudi’s refinery crude throughput declined by 0.020 million bpd to 2.478 million bpd in July from 2.498 million bpd the previous month.

Direct crude-burning, on the other side, decreased by 22,403 bpd to 561,097 bpd.

While UBS analyst Giovanni Staunovo linked the increase in Saudi ⁠crude and product exports with slowing down of the regional conflict, he added that exports could be weaker in August, particularly from Red Sea terminals, due to the renewed tensions involving the Iran-backed Houthi rebels.

Meanwhile, Saudi Arabia ‌has restarted operations at its East-West Pipeline and could resume exports from the Red Sea port of Yanbu, as per the reports.

Drone attacks, which Saudi Arabia has blamed on Iraqi ⁠militia, forced the Kingdom to shut the pipeline on September 11, halting crude loadings at the Yanbu Port.

As the Iran war began in February, Tehran, in retaliation to the US-Israeli joint airstrikes on its territories, put an embargo on the energy trade activities through the strategically crucial maritime chokehold called the Strait of Hormuz.

Riyadh, to bypass the roadblock, has been using the East-West Pipeline to reroute around four million barrels per day—around 4% of global supply—to Yanbu.

While the pipeline is pumping at a low rate after its restart, state-run oil giant Saudi Aramco is reportedly seeking to get the pumping rate back to four million bpd. The pipeline has a capacity of seven million bpd.

Reaching a rate of 40% of capacity will take ‌a ⁠couple of days, and a full restart will take six to eight weeks, a security source told Reuters.

Another oil industry source said a return to full pumping rates would take up to six weeks.

Three of the 11 pumping stations serving the East-West Pipeline got damaged in the drone attack, according to satellite imagery and industry sources.

The pipeline will resume crude supply to Aramco refineries located on the Red Sea coast, with one cargo already scheduled to load at Yanbu. As per some sources, the consignment will be dispatched for China.

Traders were also getting ⁠ready for Saudi oil loadings by moving tankers to Egypt’s Mediterranean Port Said for ship-to-ship transfers and also to Sidi Kerir.

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As per the 11-member intergovernmental organisation, global oil demand would rise to 113.3 million bpd in 2030 from 105.1 million barrels per day in 2025. Compared to the 2025 report, the overall figures have remained little changed, while the 2030 forecast remains the same.

OPEC has ⁠steadily increased its long-term oil demand forecast in the years following the COVID-19 pandemic, which in 2020 had prompted a demand contraction. Also, the organisation’s latest report comes amid the energy sector facing unprecedented challenges, as the Iran war has forced Gulf exporters to make huge export cuts, while the departure of the United Arab Emirates (UAE), an OPEC country for almost 60 years, created a void within the group.

“Changes in government policy in the US, Europe and elsewhere and long-term growth in India, the Middle East, Africa and Latin America will drive the demand expansion, despite impressive progress by China in its shift to renewable energy,” OPEC said.

“The increased focus on energy security and energy affordability has shifted the energy policy landscape across the globe. This is reflected in policy adjustments and reversals, which are expected to be supportive of oil demand in ‌the medium ⁠and long term,” the report stated further.

OPEC also cited factors like a slower-than-expected take-up of electric vehicles in Europe and policy changes by United States President Donald Trump’s administration affecting support for renewables, EVs and fuel efficiency standards.

“For the longer term, OPEC expects world oil demand to reach 124 million barrels per day by 2050, up from 122.9 million bpd expected in last year’s report, and reiterated its view that there is no peak demand on the horizon,” the report noted.

In contrast, the IEA (International Energy Agency) said in ⁠November 2025 that oil demand would hit 113 million bpd by mid-century. While the IEA’s 2050 forecast is much lower than OPEC’s, the agency had earlier expected demand to peak by 2029.

As per the ship-tracking data, the United States has become the world’s largest oil exporter in 2026, reflecting the boom in its output driven by shale oil and disruptions ⁠to Saudi and Russian exports by wars and sanctions.

“US output of tight crude, another term for shale, likely peaked in 2025 at just over 9 million bpd and sees modest total US liquids supply growth of 400,000 bpd until 2030 and a production ⁠plateau thereafter,” OPEC said.

The intergovernmental organisation expects production from countries outside OPEC+ (the wider group that includes OPEC members plus Russia and other allies) to peak from the early 2030s.

OPEC has been calling for more oil industry investment and said the sector needs spending worth USD 17.7 trillion by 2050, compared with USD 18.2 trillion estimated in 2025.

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While Tehran has kept the strategically important maritime chokehold under its firm control, as per Sultan Al Jaber, the head of state-owned oil giant ADNOC, the global oil flows may take at least four months to recover to ‌80% of pre-Iran war levels if the conflict ends today. Due to the stalemate at Hormuz, global oil and gas supplies have been disrupted since February 28, sending energy prices and inflation surging, fanning fears of an economic downturn.

Understanding the gravity of the situation, Crown Prince Sheikh Khaled bin Mohamed bin Zayed has now directed the faster completion of the new West-East Pipeline project, with the goal of doubling the UAE’s energy export capacity via the port of Fujairah by 2027.

“Today, it’s already almost 50% complete, and we are accelerating its delivery toward 2027. Right now, too much of the world’s energy still moves through too few choke points. That is exactly why the UAE made the decision more than a decade ago to invest in infrastructure that bypasses the Strait of Hormuz,” Sultan Al Jaber said during a live-streamed Atlantic Council ⁠event.

The existing Abu Dhabi Crude Oil Pipeline (ADCOP), which has the capacity of carrying up to 1.8 million barrels per day, has proved to be a crucial asset as the UAE seeks to maximise exports from the Gulf of Oman coast just outside the Strait. This further comes handy, given the fact that Iran, which has reportedly attacked vessels to assert ‌control over the Strait, ⁠has expanded its definition of the ⁠waterway to include the UAE’s Gulf of Oman coastline. The United States, on the other hand, has imposed its own blockade on Iranian ports after an aborted attempt at reopening the chokepoint.

Gulf countries, which host American military bases, have come under repeated attacks during the conflict, despite the ceasefire kicking in from April 8.

“The UAE was targeted by more than 3,000 missiles and drones aimed at civilian infrastructure, including ⁠ADNOC’s, where damage assessment is ongoing and full operational capacity could take weeks to months in some cases. The UAE was attacked for its model of development,” Al Jaber said.

“Once you accept that a single country can hold the world’s most important waterway hostage, freedom of navigation as we know it is just finished. If we don’t defend this principle today, we will spend the next decade defending against the consequences,” the ADNOC boss said, while warning that it will take until Q2 2027 for the Gulf’s energy exports (through the Strait) to hit the pre-conflict levels.

Terming the UAE’s exit from OPEC and OPEC+ a “sovereign, strategic decision” driven by a global need for more energy, Al Jaber said that the move was not aimed at anyone and not intended to rupture any relationship. The statement assumes significance as reports blamed the output quotas placed by the Saudi Arabia-led energy cartel for Abu Dhabi quitting the group.

“The global sector remains dangerously under-invested, noting current upstream investment ‌of around USD 400 billion a year barely offsets natural decline rates. Global spare crude capacity, currently around ⁠3 million bpd, needs to be closer to 5 million bpd. Looking forward, AI will strain global grids, and the world is underestimating how energy-intensive the revolution will be,” Al Jaber added.

As per the ADNOC boss, his company has remained committed to its USD 150 billion (AED551 billion) five-year capital expenditure (CAPEX) programme to enhance its operations, drive growth and meet global energy demand.

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As per analysts, the high-profile exit, which weakens ‌OPEC’s control over global oil supplies, should be seen as a by-product of the widening rift between the UAE and Saudi Arabia over OPEC’s policies.

UAE Energy Minister Suhail Mohamed al-Mazrouei, while interacting with Reuters, said that Abu Dhabi took the decision after examining its energy strategies. He sees the UAE being perfectly positioned to meet growing global energy demand in the coming days.

OPEC Puts Up A Strong Response

OPEC’s Gulf members are already finding it hard to ship exports through the Strait of Hormuz, a chokepoint between Iran and Oman through which a fifth of the world’s crude oil and LNG normally pass, due to the ongoing war. With Gulf supplies shrinking, OPEC+’s share of global oil output fell to 44% in March from about 48% in February.

Post UAE’s exit on May 1, OPEC+ convened a meeting on May 3, where it agreed to go for a modest oil output hike for June. Seven OPEC+ countries will raise oil output by 188,000 barrels per day in June, the third consecutive monthly increase, the same ratio that was agreed for May minus the UAE’s share.

While interacting with Reuters, former OPEC official Jorge Leon, also an analyst at Rystad, summed up the developments thus: “OPEC+ is sending a two-layer message to the market: continuity despite the UAE’s exit, and control despite limited physical impact. While output is increasing on paper, the real impact on physical supply remains very limited given the Strait of Hormuz constraints. This is less about adding barrels and more about signalling that OPEC+ still calls the shots.”

Saudi Arabia, the top contributor in OPEC+, will raise its quota to 10.291 million bpd in June under the agreement, far above actual production. The Kingdom reported production of 7.76 million bpd to ‌OPEC in ⁠March 2026. With the UAE’s departure, despite having 21 members, including Iran, the burden of increasing the supply flow will rest with the ‘Big Seven’ (Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman)

Another hurdle is the Strait of Hormuz. Even if the Iran war stops, and the strategically important Strait reopens, it will take several weeks, if not months, for energy flows to normalise. The ongoing energy supply disruption has propelled oil prices to a four-year high above USD 125 per barrel.

The industry also anticipates widespread jet fuel shortages, along with a spike in global inflation. American budget carrier Spirit Airlines ceased operations following an increase in jet fuel prices.

United States President Donald Trump welcomed the UAE’s move to pull out of OPEC, stating it could help lower oil ⁠prices.

“I think, ultimately, ⁠it’s a good thing for getting the price of gas down, getting oil down, ⁠getting everything down. They’re having some problems in OPEC,” he remarked.

Russian Finance Minister Anton Siluanov said, “Today,we hear that one of the countries, the United Arab Emirates, is leaving OPEC. What does this mean? It means that the country can produce as much oil as its production capacities allow, and release it onto the market. If OPEC countries conduct their policies in an uncoordinated manner (after the UAE exit), and produce as ⁠much oil as their production capacities allow, and as much as they want, prices will go down accordingly”

The Price Dynamics

Credit rating firm Fitch sees no change in the UAE’s oil production metrics in the post-OPEC world, with oil revenues getting boosted in the longer term. As per Paul Gamble, Fitch’s head of Middle East sovereign ratings, Abu Dhabi will likely increase exports once the Strait of Hormuz opens, given the fact that it won’t be handicapped by OPEC’s output-related decisions.

“That would help its balance sheet, although diversifying the economy away from oil and an improvement in the geopolitical risks are still likely to be needed to lift the UAE’s AA- stable credit rating,” he told Reuters.

Goldman Sachs stated that OPEC faces a greater upside risk to oil supply over the medium term than in the short ‌term.

“The effective ‌closure ⁠of the Strait currently limits UAE output. However, the exit implies upside risk to the bank’s base case that UAE crude production recovers to 3.8 million barrels per day by October 2026, compared with 3.6 million ⁠bpd before the war,” the bank stated.

As per Goldman, its base ⁠case assumes cumulative Gulf crude production losses of 1.83 billion barrels by December 2026, due to the UAE’s exit, with global oil inventories requiring replenishment ⁠once the trading activities around Hormuz normalise.

Barclays’ prediction sees faster oil supply growth from the UAE, once the situation normalises in the Middle East, while ANZ sees the near-term impact of Abu Dhabi’s detachment from the cartel having a limited effect as prices are still being driven more by geopolitics, inventories and logistics ⁠than by institutional changes.

HSBC envisions both OPEC and OPEC+ dealing with weak supply discipline and price‑management ability from now on.

“The loss of UAE participation could also raise the risk of compliance slippage among remaining members. If collective discipline weakens, OPEC+ may struggle to manage prices during periods of softer demand or rising non‑OPEC supply,” it predicted.

It Is Advantage UAE

Abu Dhabi’s crude oil pipeline allows exports to bypass Hormuz by carrying crude to the port of Fujairah (which recently got attacked by Iran), with the latter possessing the capacity of transporting up to about 1.8 million barrels per day. As per HSBC, once the Hormuz situation improves, the UAE will have the dual advantage in the form of Fujairah and Hormuz, which, in turn, will result in the Gulf major not only steadily raising output, but also cashing in on the growing global demand.

As per the British bank, the Abu Dhabi National Oil Company (ADNOC) could lift production ‌to ⁠more than 4.5 million barrels per day, compared with an OPEC+ quota of about 3.4 million bpd for the May 2026 period.

“Any increase in supply is expected to be spread over 12 to 18 months rather than delivered immediately, in line with ADNOC’s stated intention to raise output gradually, and according to ⁠demand and market conditions. Additional UAE barrels would help rebuild depleted global oil inventories after recent draws,” HSBC remarked.

“Over the longer term, the departure of a core Gulf member could undermine OPEC+ cohesion ⁠and credibility, making supply management more difficult to enforce. The UAE’s expanding production capacity and long‑term investment plans, including a $150 billion programme through 2030, suggest an intention to monetise reserves with fewer output ⁠constraints,” it added.

OPEC was founded in 1960 to ‘harmonise the petroleum policies of its member countries as part of its efforts to safeguard their interests’. The UAE joined OPEC in 1967 as the Emirate of Abu Dhabi. By 2026, the UAE had consolidated its position within the block as the third-largest oil-producing member, after Saudi Arabia and Iraq.

OPEC+, on the other hand, is a larger group of oil-producing countries (including Russia) that works together with OPEC to set energy policy. While the bloc’s goal was to collectively agree on and set production quotas for its member countries, it also ended up influencing global oil prices.

OPEC is known for its practice of collectively limiting and expanding the global supply of oil in the market (even dictating the price). The group was a battlefield with Abu Dhabi, throughout the years, pushing for a higher production quota within OPEC+. Its daily quota of about 3.2 million barrels sat well below its sustainable capacity (closer to 4.85 million).

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Tensions between Saudi Arabia and the UAE flared in December 2025 over a decade-long conflict in Yemen, when a UAE-aligned group seized territory from the Saudi-backed government. The crisis triggered the biggest split in decades between the former close allies. And on January 3rd, the United States captured Venezuelan President Nicolas Maduro, with Donald Trump announcing Washington’s move to take control of the Latin American country’s oil resources. While Venezuela has the world’s largest oil reserves, bigger even than those of OPEC’s leader, Saudi Arabia, its production has plummeted due to years of mismanagement and sanctions.

“Right now, oil markets are being driven less by supply–demand fundamentals and more by political uncertainty. And OPEC+ is clearly prioritising stability over action,” said Jorge Leon, head of geopolitical analysis at Rystad Energy and a former OPEC official, while interacting with Reuters.

The eight OPEC+ members, Saudi Arabia, Russia, the UAE, Kazakhstan, Kuwait, Iraq, Algeria and Oman, raised oil output targets by around 2.9 million barrels per day in 2025, equal to almost 3% of world oil demand, to regain market share.

“The eight members agreed in November 2025 to pause output hikes for January, February and March 2026 due to relatively low demand in the northern hemisphere winter. Sunday’s (January 4) brief online meeting affirmed that policy and did not discuss Venezuela,” one OPEC+ delegate said.

“The eight countries will next meet on February 1,” the source stated.

While the Saudi-UAE and Venezuela episodes will likely dominate OPEC’s 2026 agenda, at some point in time, the group has in the past managed to overcome many internal rifts, such as the Iran–Iraq War, by prioritising market management over political disputes.

Yet the group is facing other crises, with Russian oil exports falling due to American sanctions over its war in Ukraine, apart from Iran facing protests and possible American intervention. Analysts said it is unlikely to see any meaningful boost to crude output for years, even if American oil majors do invest billions of dollars in Venezuela in 2026.

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According to a monthly report, global oil demand is expected to increase by 1.45 million barrels per day in 2025 and by 1.43 million barrels per day in 2026.

Neither prediction changed from the previous month. Unlike the International Energy Agency (IEA), which believes that demand will peak this decade as the world transitions to cleaner fuels, OPEC thinks that oil demand will continue to rise in the years to come.

Although it stated that United States President Donald Trump’s trade policies have increased market uncertainty and may lead to supply-demand imbalances that are not indicative of market fundamentals, OPEC did not alter its forecast for economic growth in 2025.

“It remains to be seen how and to what extent potential tariffs and other policy measures will play out. So far, they are not anticipated to materially impact the current underlying growth assumptions,” OPEC said in the report.

With Brent crude trading lower at USD 76 per barrel following the release of the OPEC report, oil prices remained stable.

Demand growth in 2025 is predicted by the IEA to be 1.05% bpd, which is less than OPEC’s.

However, the gap between the two in 2025 is significantly smaller than it was in 2024, when disagreements over the rate of the energy transition hit a record high.

Since late 2022, the market has been supported by a series of output cuts carried out by OPEC+, which consists of OPEC and allies like Russia.

According to its current plan, oil production will be progressively increased starting in April 2025.

Meanwhile, in January, Russia’s crude production dropped to 8.962 million barrels per day, which was 16,000 barrels per day less than what was required by the OPEC+ supply agreement.

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In 2024, the world’s total oil demand is predicted to reach 105 million barrels per day in the fourth quarter and 103 million barrels per day in the entire year.

The global demand growth forecast for 2025 was also lowered by OPEC to 11.4 million barrels per day. The estimated global oil demand for 2025 is 105 points per day.

“Growth is expected to be bolstered by strong air travel demand and healthy road mobility, including on-road diesel and trucking, as well as healthy industrial, construction and agricultural activities in non-OECD countries,” OPEC said in its monthly report, as reported by Zawya.

Earlier this month, in response to declining prices, OPEC+ postponed its plan to begin increasing output until April 2025. OPEC had maintained its 2024 outlook, which it had adopted in July 2023, until August.

While the forecasts for next year are related to the possible impact that will arise from US tariffs, OPEC claims that the downgrade for this year is due to more pessimistic data that was received in the third quarter.

The largest of the five cuts OPEC has made in its monthly reports since August is the 210,000 bpd cut in the 2024 figure. OPEC predicted a 2 to 25 million barrel per day increase in global demand in July.

“The bulk of this revision is made in the third quarter, taking into account recently received bearish data for the third quarter,” OPEC said in the report.

According to OPEC, China, India, other Asian nations, the Middle East, and Africa were all involved in the most recent downgrade. From 760,000 bpd in July, OPEC now projects a 430,000 bpd increase in Chinese oil demand in 2024.

After decades as the primary force behind rising oil consumption, China’s imports of crude oil are expected to reach a peak as early as 2025 as the world’s largest consumer of crude oil starts to see a decline in demand for transportation fuel.

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The IMF’s press release summarised the key points discussed during the consultation: OPEC+ production cuts have put the economy in a recession, but the non-oil sector is rebounding and inflation is decreasing.

A 4.3% drop in the oil sector and a 1% contraction in the non-oil sector were the main causes of the 3.6% real GDP contraction in 2023. Real GDP shrank 1% year over year in the second quarter of 2024, with the oil sector declining 6%, partially offset by a 4% recovery in the non-oil sector.

In September 2024, headline CPI inflation further moderated to 2.6% after dropping to 3.6% in 2023. Financial stability is unaffected, although Kuwait’s external and fiscal balances have been weakened by lower oil production and prices.

The current account surplus moderated to 31.4% of GDP in 2023, indicating that the external position is still strong. By the end of 2023, official reserves totalled USD 47.6 billion, which was enough to cover projections for imports for 9 months.

The central government’s fiscal balance changed to a 31.1% GDP deficit in the fiscal year 2023–2024. Nonetheless, the overall fiscal balance of the government, which includes the income from SWF investments and the profit transfers from SOEs, remained robust at 26.1% of GDP.

In 2023, banks maintained strong capital and liquidity buffers, and non-performing loans (NPLs) remained low and well-provisioned, despite a slowdown in credit growth brought on by higher interest rates.

As a result of ongoing production cuts by OPEC+, Kuwait’s economy is predicted to remain in recession in 2024, contracting by 20.8%, before gradually improving.

As the cuts are unwound, real GDP growth is anticipated to reach 2.6% in 2025. Despite fiscal consolidation, the non-oil sector will continue to recover, with real credit growth increasing and non-oil GDP growing by 2.0%.

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In December, eight members of OPEC+, which consists of the Organisation of the Petroleum Exporting Countries, Russia, and other allies, were scheduled to increase production as part of a plan to gradually lift the most recent round of output restrictions, which included a 2–2 million barrels per day (bpd) cut.

However, sources told Reuters recently that the group was concerned about adding more supply due to weak demand and economic data, before ministers decided to postpone the hike on Sunday following consultations.

According to a statement from OPEC, the eight nations agreed to prolong the two million barrels per day cut for one month, until the end of December 2024.

Additionally, according to the statement, they “reiterated their collective commitment to achieve full conformity” with output targets. Due in part to the possibility of an additional postponement of the OPEC+ increase, oil prices ended Friday’s trading session just above USD 73 per barrel.

Despite this, Brent crude is still not far from its September low of less than USD 69 this year. Due to a combination of rising supplies, weak demand, and declining prices, OPEC+ had already postponed the increase from October 2024. Prices have also been affected by a reduction in investor anxiety about the Middle East conflict interfering with the region’s oil production.

To balance supply and demand, OPEC and Saudi Arabia have stated time and time again that they base their decisions on market fundamentals rather than aiming for a specific price.

The December increase was scheduled to be 180,000 barrels per day, which is a minor portion of the 586 million barrels per day of output that OPEC+ is reserving, or roughly 5:7% of the world’s demand. To support the market, OPEC+ agreed to make those cuts in phases starting in 2022.

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