The biggest single-month decline in history! OPEC supply plummets dramatically, oil crisis reemerges

Caixin News, April 8 (Editor Zhao Hao) — Due to the impact of Middle East conflicts, OPEC’s main member countries’ exports have been significantly hindered, with the organization’s crude oil production in March experiencing the largest month-on-month decline in at least forty years.

Data shows that OPEC’s daily crude oil output plummeted by 7.56 million barrels, to 22 million barrels per day, a decrease of about 25%. The main reasons are the closure of the Strait of Hormuz, forcing Saudi Arabia, the UAE, and Iraq to significantly cut production.

This is the largest “single-month” decline since statistics began in 1989. However, it should be noted that during the global fuel demand collapse caused by the COVID-19 pandemic in 2020, OPEC implemented even larger-scale production cuts over “two months.”

In terms of single-month decline, this even surpasses the period of the 1973 Arab oil embargo — from October to December of that year, the market reduced total supply by about 5 million barrels per day, at a time when the global oil market was much smaller than today.

Iraq — the OPEC member most dependent on the Strait of Hormuz — experienced the largest decline, with output decreasing by 2.76 million barrels to 1.63 million barrels per day.

Although Iran has announced the release of Iraqi oil shipments, tracking data of oil tankers currently shows no ships testing this exemption on a large scale.

Production declines in Saudi Arabia and the UAE were also significant, but the impact was somewhat alleviated because they can partially export through alternative pipelines bypassing the Strait.

Data shows Saudi Arabia’s daily output decreased by 2.07 million barrels to 8.36 million barrels, and the UAE’s output decreased by 1.44 million barrels to 2.16 million barrels. Although Saudi Arabia can export via the Red Sea, tanker data indicates that its exports in March still roughly declined by about 50%.

The sharp reduction in crude oil supply has also caused intense fluctuations in international oil prices. Last month, WTI and Brent crude prices both approached $120 per barrel, and prices of refined products such as jet fuel, diesel, and gasoline surged, putting pressure on consumers.

During the day, Brent crude briefly broke above $111 per barrel. Reports indicated that the U.S. attacked more than 50 military targets on the Halek Island oil export hub in Iran.

The previous day, Trump stated that if Iran does not “surrender” by 8:00 p.m. Eastern Time on April 7 (8:00 a.m. Beijing Time on the 8th), the U.S. would strike its civilian facilities.

Earlier in the day, Trump said, “Tonight, all of civilization will perish, never to return,” “I don’t want this to happen, but it might… perhaps some revolutionary miracle will happen, who knows? Tonight, we will witness it.”

Meanwhile, Russia, a key ally of OPEC, was also affected by attacks on Baltic Sea oil export