Saudi crude oil output increased by 0.83% in August, with exports and domestic demand also rising despite global market fluctuations

In a key development for the global energy market, Saudi Arabia’s crude oil production rose to 8.99 million barrels per day (bpd) in August 2024, marking a 0.83% increase compared to the same month last year. This rise in production aligns with the Kingdom’s efforts to manage global supply amid ongoing OPEC+ production cuts, aimed at stabilising prices and reducing market volatility.

Data from the Joint Organizations Data Initiative (JODI) highlighted not only the growth in crude production but also a notable rise in crude exports, which climbed to 5.67 million bpd, reflecting a 1.56% year-on-year increase. The domestic petroleum demand within Saudi Arabia also saw a substantial rise, growing by 117,000 bpd to reach 2.89 million bpd.

This positive momentum in Saudi crude production comes as OPEC+ continues to enforce a series of voluntary output cuts. During a virtual meeting in early September, the group reaffirmed its commitment to maintaining production reductions initially announced in April and November 2023. These cuts are expected to remain in place until the end of 2025, despite initial plans to ease them by October being postponed due to falling oil prices.

OPEC+ has been implementing these cuts since late 2022 in response to fluctuating market conditions and geopolitical tensions, which have resulted in global supply disruptions. For September 2024, OPEC’s overall production took a hit, with output falling by 557,000 bpd to 40.1 million bpd, largely due to unrest in Libya and reduced production in Iraq.

While crude production remains steady, Saudi Arabia also experienced a 5% decline in refinery crude exports during the same period. However, this figure still represented an 11% increase from July, with exports reaching 1.25 million bpd. These exports mainly included refined products such as diesel, motor gasoline, aviation gasoline, and fuel oil, with diesel making up 43% of the total shipments. Notably, gas diesel shipments saw a 10% growth, reaching 537,000 bpd in August.

In terms of refining capacity, Saudi Arabia saw an 8% year-on-year increase in July 2024, with refinery output reaching 2.77 million bpd. Diesel remained the dominant product, accounting for 44% of total refined outputs, followed by motor and aviation gasoline at 25%, and fuel oil at 16%.

Despite the uptick in production and exports, the broader global market faces a more cautious outlook. In October 2024, OPEC revised its global oil consumption forecast for 2024 downward, reducing expected growth from 2.03 million bpd to 1.93 million bpd. The 2025 forecast was similarly adjusted, down to 1.64 million bpd, reflecting the organisation’s third consecutive downward revision. This is attributed to a combination of new economic data and tempered regional expectations, particularly concerning demand in key markets.

Nevertheless, OPEC remains optimistic about long-term demand, forecasting that global oil consumption will reach 104.1 million bpd in 2024 and rise to 105.8 million bpd by 2025. The primary drivers of this demand growth include air travel, road mobility, and industrial activities, with combustion-engine vehicles expected to dominate the global fleet until at least 2050.

While electric vehicles are gradually making inroads, traditional oil-powered vehicles continue to sustain global crude demand, particularly in developing economies. OPEC projects that global oil demand could reach as high as 112.3 million bpd by 2029, a figure that reflects the enduring reliance on oil despite the rise of renewable energy alternatives.

Saudi Arabia, as a key player in the OPEC+ alliance, is navigating this complex market landscape, balancing its domestic energy needs with its role as a stabilising force in global oil markets. The Kingdom’s commitment to OPEC+ agreements, combined with its rising production and export figures, underscores its strategic importance in shaping the future of global energy supply and demand.