Clouds gather over the Strait of Hormuz as Saudi Arabia abruptly cuts daily production by 2 million barrels, changing the oil market supply landscape

⑴ According to institutional sources on Friday, two insiders revealed that Saudi Arabia, the world's largest oil exporter, has reduced its oil production by approximately 2 millions barrels per day, bringing it down to around 8 millions barrels per day. This move stems from the country shutting down part of the output from two major offshore oil fields. ⑵ Sources said that although Saudi Arabia is transferring more crude oil to the Yanbu port on the Red Sea coast to avoid potential risks in the Strait of Hormuz, production has dropped following the closure of the Safaniya and Zuluf offshore oil fields. Another source confirmed that Saudi Arabia's production has fallen below 8 millions barrels per day. ⑶ It is understood that the closed offshore oil fields mainly produce heavy and medium-heavy crude oil, with a combined output exceeding 2 millions barrels per day. The pipeline to Yanbu is primarily used to transport light crude oil and cannot fully offset the supply gap of heavy crude oil. ⑷ If production has indeed dropped to 8 millions barrels per day, it means there has been a steep decline compared to the market supply in February. Data shows that Saudi Arabia supplied 10.11 millions barrels per day to the market in February, with production at 10.88 millions barrels per day. At that time, the production increase was seen as an emergency plan to address potential supply risks.