Saudi Oil Production Surges as Regional Tensions Ease

Saudi Arabia's crude oil production rebounded in July, according to a report from OPEC. The kingdom told the group it pumped 8.2 million barrels per day (MMbpd) of crude last month, up from 7.1 MMbpd in June. This increase is part of a broader trend among Persian Gulf producers, who have seen their production recover during a brief ceasefire in the Iran war.

The report also noted that Saudi Arabia's output is still several million barrels below pre-conflict levels. However, it is worth noting that the kingdom has been adding to its inventories while export routes remain impeded. In fact, the International Energy Agency estimated that Saudi domestic crude stockpiles reached their highest level since at least 2016 by early August.

The increase in production among OPEC members was led by Iraq and Saudi Arabia, which saw their output rise by a combined total of 1.88 MMbpd. The collapse of the ceasefire and renewed hostilities between the US and Iran have imperiled two of Saudi's main export channels - the Strait of Hormuz and the Bab el-Mandeb Strait.