OPEC Oil Output Drops to 26-Year Low as Iran Conflict Disrupts Global Supply Chains

OPEC’s crude oil production has fallen to its lowest level in 26 years, reflecting major disruptions in global supply chains linked to the ongoing conflict involving Iran. According to a Reuters survey, total output dropped by 830,000 barrels per day in April, bringing production down to an average of 20.04 million barrels per day. The decline marks one of the most significant supply contractions in recent decades and underscores growing instability in the global oil market.

The sharp decline was largely driven by disruptions in the Strait of Hormuz, a critical oil shipping route. Kuwait recorded the steepest drop, with reports indicating it exported no crude oil in April due to its reliance on the waterway. Saudi Arabia and Iraq also saw production fall as attacks on energy infrastructure forced partial shutdowns and reduced output capacity across key facilities.

Despite the regional downturn, Saudi Arabia has attempted to cushion export losses by relying on its East-West Pipeline, which allows crude to be transported to the Red Sea and shipped without passing through the Strait of Hormuz. However, the kingdom still saw production fall significantly to around 7 million barrels per day after damage to key facilities reduced capacity by about 600,000 barrels per day.

The United Arab Emirates stood out as the only Gulf OPEC member to increase production during the period. Using the Fujairah terminal in the Gulf of Oman, the UAE bypassed Hormuz constraints and boosted exports. Production is estimated between 3.2 and 3.6 million barrels per day, with state oil giant ADNOC targeting expansion to 5 million barrels per day by 2027 following structural changes in its OPEC participation.

Outside the Gulf, Venezuela and Libya also posted production gains, reaching 1.23 million and 1.43 million barrels per day respectively. However, these increases were not enough to offset the broader supply losses. Overall, the disruption highlights how geopolitical tensions continue to reshape global energy flows, tightening supply and increasing pressure on oil markets worldwide.

source: oilprice