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

Cailianpress April 8 (Editor Zhao Hao) Affected by the conflict in the Middle East, exports from OPEC’s major member countries have been clearly disrupted. In March, the group’s crude oil output hit the largest quarter-on-quarter decline in at least the past forty years.

Investigations show that OPEC’s daily crude oil output fell sharply by 7.56 million barrels, to 22 million barrels per day, a decline of about 25%. The main reason is that the Strait of Hormuz has been closed, forcing Saudi Arabia, the UAE, and Iraq to cut production significantly.

This is the largest “single-month” drop since the organization began tracking data in 1989. However, it should be noted that during the period when global fuel demand collapsed amid the COVID-19 pandemic in 2020, OPEC previously implemented even larger-scale production cuts within “two months.”

Judging by the month-on-month decline alone, this time it even exceeds the period of the 1973 Arab oil embargo—between October and December of that year, the market reduced total supply by about 5 million barrels per day. At that time, the global oil market size was far smaller than it is today.

Iraq—OPEC’s member that is most dependent on the Strait of Hormuz—saw the largest output decline, with daily output dropping by 2.76 million barrels to 1.63 million barrels.

Although Iran has announced that it will allow the shipment of Iraqi crude oil, tanker tracking data shows that, as of now, no vessels have been put to a large-scale test of this exemption.

Saudi Arabia and the UAE also saw sizable declines in output, but since they can partially export through alternative pipelines that bypass the strait, the impact has been somewhat alleviated.

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

The sharp drop in crude oil supply has also triggered severe volatility in international oil prices. Last month, both WTI and Brent crude were approaching the $120 per-barrel level, and prices of refined products such as aviation fuel, diesel, and gasoline also surged, putting pressure on consumers.

During the day, Brent briefly rose above $111 per barrel. At the time, reports said that the U.S. attacked more than 50 military targets on Khark Island, an oil export hub for Iran.

The day before, Trump said that if Iran did not “surrender” by 8:00 p.m. U.S. Eastern Time on April 7 (8:00 a.m. Beijing time on April 8), it would strike its civilian facilities.

Earlier during the day, Trump said, “Tonight, the entire civilization will perish, never to return,” adding, “I don’t want something like that to happen, but it might happen… maybe it will happen some revolutionary miracle—who knows? Tonight, we will witness it.”

Meanwhile, Russia, an important ally of OPEC, has also been disrupted by attacks on the Baltic Sea oil export terminals from Ukrainian drones.