Saudi Arabia's oil production in October surged by 26%, reaching the highest level since the onset of the conflict, while Brent crude has dropped over 20% this month

Saudi Arabia's crude oil production has rebounded sharply, driving a comprehensive recovery of supply in the Persian Gulf region and accelerating the drag on global oil prices.

According to a monthly report obtained by Bloomberg from the Organization of the Petroleum Exporting Countries (OPEC) Secretariat, Saudi Arabia's average daily crude oil production in October rose to 10.56 million barrels, surging 26% from the previous month, reaching the highest level since the outbreak of war.

At the same time, Iraq's production also climbed to a new wartime high. Large volumes of crude have flooded the physical market, pushing down price differentials against a backdrop of still sluggish demand, and there are initial signs of a market surplus.

This round of increased production has coincided with a critical point for OPEC to assess each member’s maximum output capacity. The results of this assessment will be used at OPEC+'s online meeting on November 29 to discuss production targets for 2027.

Saudi Aramco CEO Amin Nasser stated at an industry conference in Abu Dhabi last week that the company aims to "maximize production in the fourth quarter," and noted that inventory replenishment would significantly boost global demand.

Brent crude oil futures have so far dropped about 21% this month, currently quoted at $93 per barrel.

Saudi Production Nears Pre-war Peak, Hormuz Strait Transport Breakthrough Is Key

In October, Saudi Arabia’s daily output reached 10.56 million barrels, just several hundred thousand barrels short of its pre-war February output, and slightly above the country’s quota ceiling within the OPEC framework.

The core driving force behind the production rebound is the breakthrough in transport bottlenecks. Saudi Arabia has, to a considerable degree, mastered the technology for clandestine shuttle shipments through the Strait of Hormuz—a strategy that the UAE first explored and implemented in the early days of the war.

At the same time, Saudi Arabia has also activated an alternative pipeline to the Red Sea coast, although this pipeline was previously attacked.

Iraq also reported to OPEC that in October its daily output rose to about 4.9 million barrels, a new wartime high that clearly exceeds its agreed production ceiling.

Discrepancies Between Actual Production and Quota Checks, OPEC’s Stance Remains Unclear

It is noteworthy that when evaluating members' quota compliance, OPEC uses external source data instead of numbers self-reported by member states, and there are significant differences between the two sets of data.

According to external sources, Iraq's actual daily output in October was about 4.491 million barrels, basically in line with its specified limit; Saudi Arabia's external source data was 9.194 million barrels per day, still clearly below its quota ceiling. This differs considerably from Saudi Arabia's self-reported 10.56 million barrels.

Given that many member countries have been forced to produce well below their quota for a long time during the war, resulting in a sharp drop in global oil inventories, it is still unclear what stance OPEC will take regarding quota violations.

This surge in production also serves as a post hoc footnote for a series of quota increases previously passed by OPEC+ during the conflict. Back then, hampered by export disruptions, these increases were almost meaningless, but now they give oil producers extra space to open the taps.

OPEC+’s review of each member's maximum production capacity is expected to be completed in the coming days, after which the alliance will hold an online meeting on November 29 to discuss arrangements for 2027’s output targets based on these results.

Competition for Market Share Intensifies as Saudi Arabia and the UAE Compete to Lower Asian Prices

Behind the production rebound, competition for market share is quietly heating up. In May this year, the UAE chose to leave OPEC after long-term membership to escape production caps and compete independently in the market.

Recently, both Saudi Arabia and the UAE have significantly lowered official December shipment prices for buyers in Asia, making the competitive landscape fiercer.

This round of price war signals, combined with continued recovery on the supply side, has made the market more cautious about the outlook for oil prices.