Saudi Arabia informed OPEC that its crude production plummeted by 1.9 million barrels per day in August 2026, dropping to 6.238 million barrels daily—the kingdom's lowest reported level since 1990, at the start of the Gulf War. Riyadh blamed the collapse on renewed hostilities between the United States and Iran that have squeezed its export corridors, according to official communication obtained by Bloomberg. The issue isn't underground supply—the physical oil remains in Saudi fields. The problem is getting it to buyers as tanker rates hit record levels, the Bab el-Mandeb Strait tightens under Houthi control, and the Strait of Hormuz stays a high-risk passage.
Brent crude traded around $107 to $108 per barrel on September 10, with sharp intraday jumps as Red Sea developments broke. OPEC production as a group ran roughly 26.6 million barrels daily in 2024 and about 27.6 million in 2025, before the 2026 crash. In the second quarter of 2026, OPEC crude fell toward the high teens to around 20 million barrels per day as Gulf export routes seized up. July saw a partial rebound as pipeline workarounds and quota increases took effect, but August reversed again for Saudi Arabia. Oil tanker rates have soared because vessels are tied up on longer, riskier voyages—the benchmark VLCC rate from the Middle East to China has reached near $800,000 a day, while a U.S. Gulf Coast-to-Asia supertanker fixture hit a $29.5 million lump sum before war-risk extras. In 2024, OPEC members exported about 19.7 million barrels daily of crude, with Asia taking roughly 70 percent. China, India, Japan, South Korea, and other Asian nations absorbed the bulk of Saudi, Iraqi, Kuwaiti, Emirati, and Iranian grades.
The pattern by country is consistent, the report states. Saudi Arabia, Kuwait, and Iraq absorbed the largest wartime hits because their export systems depend on the Gulf and, increasingly, Red Sea alternatives. Libya, Nigeria, and Venezuela faced less exposure to Hormuz disruptions, while Iran's volumes swung with sanctions enforcement, dark-fleet activity, and direct conflict. The report notes that OPEC+ had been raising official targets—another 188,000 barrels daily for August across seven core producers—as it unwound 2023 voluntary cuts, but logistics overrode the paper quotas. On September 10, Houthi forces captured Mocha, tightening control over approaches to the Bab el-Mandeb strait, and transits plunged. Saudi crude that left Ras Tanura for Yanbu to escape Hormuz now faces a Red Sea gauntlet.
The dual chokepoint explains why freight isn't a sideshow. At $800,000 a day for a VLCC, freight and insurance can add several dollars per barrel to Asian delivered cost on top of already elevated flat prices, according to the report. Inefficient routing via the Cape of Good Hope instead of Suez and the Red Sea extends voyage times, reduces effective fleet supply, and feeds the next rate spike. Goldman Sachs lifted its December 2026 Brent forecast to about $85 and 2027 averages to roughly $80, but the bank's scenario work carries the louder message: Brent could exceed $120 if 2027 average Gulf output stays 4 million barrels per day below pre-war levels, with intensified attacks on Hormuz and Red Sea shipping as the stated upside trigger. Other banks have moved similarly—HSBC raised 2026 Brent to $90 and 2027 to $85, UBS lifted year-end to $95, and the EIA now sees 2026 Brent averaging about $91.
The report's outlook is blunt: this isn't a classic OPEC quota story, it's a chokepoint-and-freight story layered on top of a war. Pump prices and diesel costs will stay volatile and biased higher while both straits remain impaired, with Asia feeling freight costs most directly, Europe facing product and middle-distillate tightness, and the United States buffered by domestic crude but not immune to gasoline, jet fuel, and imported product pressures. The distribution of outcomes is unusually wide—a ceasefire-plus-open-straits path can push prices toward the $60s to $70s in 2027, while a dual-blockade scenario can overshoot $120. Until Hormuz and Bab el-Mandeb both function, tanker rates will stay extreme, Asian buyers will pay a delivery premium, and price forecasts will keep getting rewritten every time a Yemeni coastal port changes hands.