Gulf States Resume Crude Oil Production Increases, Still Below Pre-War Levels

Gulf states, led by the UAE, have resumed crude oil production increases after OPEC restrictions were lifted, but output remains far below pre-war levels. The UAE, which left OPEC on May 1, reached a record output of over 3.8 million barrels per day in June, the highest in six years, as traffic through the Strait of Hormuz allowed. Saudi Arabia, the largest Gulf producer, exported only 4.3 million barrels per day in June, about 3 million barrels per day below February levels. Kuwait's production rose to 1.65 million barrels per day in June, triple May levels but still 1 million barrels per day below pre-conflict output. Iraq, the second-largest producer, also saw increases but remains constrained. Oil prices have stabilized over the past ten days, holding at levels seen when the US and Israel attacked Iran, indicating market equilibrium amid geopolitical tensions.

Global Impact

Economically, the production increases from Gulf states, especially the UAE, could help stabilize global oil markets and ease inflationary pressures from high energy costs. Politically, the UAE's departure from OPEC and its record output challenge Saudi Arabia's leadership within the cartel, potentially leading to a realignment of oil alliances.