Saudi Output Plunge Drives Oil Prices to Near $110/bbl
Oil prices surged to nearly $110/bbl as tensions in the Middle East escalated. According to ING analysts Warren Patterson and Ewa Manthey, rising risks to Saudi energy infrastructure and Red Sea exports are driving the market's focus on supply vulnerabilities.
The recent drop in Saudi Arabia's output is a concern for oil markets. The country reported producing 6.24m b/d in August, its lowest level since the 1990s.
Despite this, Saudi Arabia supplied more to the market than it produced, suggesting that the impact of reduced production may be mitigated in the short term.
The market is also being supported by stronger Chinese crude buying. Independent refineries in China have been increasing their run rates, with data showing they are now running at almost 63% capacity, up from 45% in July.