Saudi Arabia’s oil exports soar as kingdom tries to claw back market share

Saudi Arabia’s oil exports soared in June as the kingdom tries to claw back market share from other members of the energy alliance Opec.

Saudi exports jumped by 441,000 barrels a day, or about seven percent, in June, to 6.36 million a day, according to tanker-tracking data compiled by Bloomberg.

The jump underscores how Saudi Arabia is trying to leverage its heft in the energy market by unleashing supply after years of restricting it, in an effort to keep prices higher. The jump also reaffirms the limited impact the conflict between Israel and Iran had on oil exports.

Iran and Israel both generally refrained from attacking energy infrastructure geared towards exports. Iranian oil exports also soared despite Israeli attacks.

Saudi Arabia is exporting more oil, but prices have also dropped. Brent Crude was trading at roughly $75 per barrel at the start of the year. On Tuesday, Brent was trading $67.07 per barrel.

For years, Saudi Arabia pushed an energy alliance that includes Russia, dubbed Opec+, to cut production in a bid to lift oil prices. Saudi Energy Minister Abdulaziz bin Salman went so far as to warn market speculators that they would be “ouching like hell” if they doubted his willingness to starve the oil market of supply. 

One outcome of constricting supply was that Saudi Arabia surrendered market share in India and China to other oil exporters like Iran and Russia.

The kingdom also did the heavy lifting to support prices. The United Arab Emirates won concessions to lift its production quotas in recent years from Opec+.

Energy analysts also said Saudi Arabia’s decision to boost output was aimed at Iraq and Kazakhstan, two Opec+ members who were going even further, exceeding their production quotas.

Bank of America said last month that Saudi Arabia was gearing up for a prolonged period of lower prices and more supply.

“It’s not a price war that is going to be short and steep; rather, it’s going to be a price war that is long and shallow,” Francisco Blanch, the bank’s head of commodities research, told Bloomberg.

According to Oxford Analytica, Saudi Arabia needs an oil price of over $100 per barrel to balance its budget in 2025, when factoring in spending by the kingdom’s Public Investment Fund (PIF) on megaprojects.

With prices down, Saudi Arabia has turned to issuing more debt to fund Crown Prince Mohammed bin Salman’s Vision 2030 agenda, aimed at diversifying the kingdom’s economy.

Some analysts say Saudi Arabia is well-placed to endure a slump in prices because it has a relatively low debt-to-GDP ratio and there is strong global demand for its debt.

“Saudi Arabia doesn’t need to balance its budget,” Ellen Wald, the founder of the energy consulting firm Transversal Consulting and the author of Saudi Inc., previously told Middle East Eye.

“The idea that Saudi Arabia needs a certain dollar per barrel to balance its budget doesn’t really explain the new Saudi mindset when it comes to oil pricing,” Wald said.

Saudi Arabia likely had a range of motivations to boost output this year, experts say. In addition to trying to win back some market share, the rise in global supply has helped keep energy prices low. That has been a boost to US President Donald Trump as he tries to tame inflation. The surge in oil supply also helped keep prices from rising during Israel’s attack on Iran.

Brent jumped more than 10 percent after Israel’s attack on Iran, but fell quickly once Iran limited its response to the US strikes on their nuclear facilities.