- OPEC Output Dips 1.5mbpd in September
Crude oil production by the Organization of Petroleum Exporting Countries (OPEC) declined by 1.59 million barrels per day (mbpd) in September following Saudi Arabia’s drone attacks.
Crude production from the 14 members of the cartel plunged to 16 years low of 28.32 million a day in September, according to Bloomberg’s ship-tracking data.
Saudi Arabia, the largest exporter of crude oil, was attacked on September 14 by Iran-backed Houthi rebels in Yemen, erasing 5.7mbpd in crude oil production.
Brent crude oil rose by 20 percent immediately to about $68 a barrel before pulling back to $58 on Wednesday, below the federal government’s $60 benchmark for 2019.
While Saudi Arabia has been able to restore production to the preattack level, the uncertainty in the region continues to weigh on oil prices.
In the last four months, the Kingdom has been attacked twice and just this past weekend, Houthi rebels attacked another Saudi-mechanized column along the Yemen border, capturing hundreds of soldiers.
“Various Saudis I’ve spoken to raise the possibility that what is happening could be at the hands of elements inside the Saudi government that want to embarrass MbS because they see him as putting Saudi Arabia in a corner,” said Trita Parsi, executive vice president of the Quincy Institute. “If you were a Saudi, and you were concerned about the future of your country, I don’t think it’s difficult to draw the conclusion that MbS is your first obstacle.”
The September 14th attacks erased about 5 percent of global supply, any further attack on Saudi Arabia could disrupt global commodity outlook for the rest of the year and drag on global growth.
The risk to the region and global oil outlook has increased amid intermittent attacks on the Kingdom’s key facilities. Therefore, the world focus would be on the US-China trade negotiation for a rescue.
On September 25th, Saudi Arabia claimed to have restored output to 9.9mbpd, above the pre-attack level of 9.8mbpd.
