Saudi Arabia's Oil Output at 36-Year Low as War Keeps Brent Near $109
Saudi Arabia produced just 6.316 million barrels a day in April, its lowest output since 1990, even as higher crude prices narrow the budget deficit.
ICE Brent crude front-month was trading at $108.91 a barrel on Thursday (2026-09-10), more than 20% above the roughly $90 level recorded in late July (2026-07-30), as the Persian Gulf supply shock from Saudi Arabia's deepest production slump in 36 years continues to underpin crude prices.8
Saudi Arabia told OPEC that its crude output fell a further 651,000 barrels a day in April (2026-04) to 6.316 million barrels a day, according to Bloomberg — the lowest since 1990. The decline was not a voluntary cut. Iran's conflict with the US and Israel, which erupted in late February (2026-02), choked Persian Gulf export routes and constrained what Riyadh could physically ship.2
The supply loss spread across the cartel. OPEC's 11 current members produced 16.33 million barrels a day in May (2026-05), down 1.22 million barrels a day from April, according to a survey reported by CNBC TV18 — the lowest in decades. A separate survey, cited by Economic Times, put the group at 16.13 million barrels a day, a fall of 1.06 million barrels a day month-on-month, with Iran accounting for the bulk of the decline as the US naval blockade held.3,4,5
For now, the fiscal arithmetic has moved in Riyadh's favour. Saudi Arabia's second-quarter budget deficit shrank to 34.3 billion riyals ($9.1 billion), down from 125.7 billion riyals in the first quarter, according to the finance ministry. Oil revenue rose 28% from the first quarter as crude prices climbed. The oil sector itself contracted by almost 25% in the quarter — yet the price surge more than made up the shortfall.8
That is not a settled outcome. The kingdom was still spending at levels 11% higher than the second quarter of 2025 by the end of June, a legacy of early war outlays. Spending did fall 3.5% quarter-on-quarter. But it remains elevated against a physical oil industry running far below its pre-war rates.8
The IMF sees the deficit shrinking to 3.7% of GDP this year and 3.1% in 2027, on the assumption that higher prices more than compensate for lower export volumes. A Gulf News analysis from mid-May (week of 2026-05-18) put a 5% of GDP deficit scenario on the table should price strength fade. OilPrice.com data from the same period showed the broader economy expanded 2.7%, with non-oil sectors growing 4.2%, providing some buffer — though not one that insulates the budget from a crude price reversal.1,8
Saudi Arabia responded to the changed volume picture with an aggressive pricing move. In July (2026-07), the kingdom cut its official crude prices for Asian buyers by the biggest margin in more than two decades, offering Arab Light at the steepest discount seen in that timeframe, according to reports from Firstpost and Financial Express. Analysts described the move as a push to defend market share against Russian and Iranian crude in Asia, not the opening of a new price war.6,7
ICE Brent had pulled back in early July (2026-07) to levels last seen before the Iran conflict erupted in late February (2026-02), as fears of a supply surplus mounted with OPEC+ raising production for a fifth consecutive month. The contract has since recovered to its current level above $108 a barrel.6
Physical access to export routes remains the binding constraint on all these projections. Aramco Trading and the UAE's Adnoc have managed to move some crude cargoes through the Strait of Hormuz since Iran largely closed the waterway, people familiar with the situation told Bloomberg in May (2026-05). The volume they can push through sets the practical ceiling on how much of Saudi Arabia's available capacity reaches paying customers.3
WTI crude front-month was at $103.98 a barrel on Thursday (2026-09-10), with NYMEX Heating Oil at $5.15 a gallon — a distillates premium that reflects the tighter middle-distillate supply flowing from disrupted Gulf output. Monthly OPEC production data for August will be the next test of whether the Hormuz workaround has expanded Saudi volumes back toward pre-war levels or locked the kingdom near the 6.3 million barrel a day floor for the rest of the year.