UAE crude exports hit a record 3.8 million barrels a day in June, according to Kpler data, as Gulf producers across the Middle East rushed to sell down oil built up in tankers and storage during the Iran war's disruption of the Strait of Hormuz. The surge followed the partial reopening of the strait after a June 17 memorandum of understanding between the US and Iran. Much of the volume likely came from onshore and offshore storage, since oilfield production is still recovering gradually.
The push follows Abu Dhabi's decision to quit OPEC in May after six decades of membership, a move that leaves it free to set its own production strategy without the group's constraints.
Saudi Arabia is turning up output too. Its June exports climbed to 4.5 million bpd, the highest level since the war began, and July shipments are set to jump to 6.4 million bpd, according to Kpler, within 1 million bpd of pre-war levels. Iraq and Kuwait, which had shut down much of their production during the conflict, also resumed exports, each shipping around 500,000 bpd through Hormuz in June. Total exports through the strait nearly quadrupled in June from May to about 4.2 million bpd; including volumes routed through ports that bypass Hormuz, that figure rises to roughly 10.5 million bpd, still well below the pre-war average of about 17 million bpd.
Discounts widen to move the barrels
Most refiners in Asia and Europe had already secured their supply through the end of August, leaving Gulf producers to compete hard for the markets that remained. Producers are offering discounts of up to $20 a barrel below Brent in some cases, traders say. Saudi Arabia set its August official selling price for Arab Light at $1.50 a barrel below the Oman/Dubai benchmark, down from a $9.50 premium in July, according to a pricing document, the lowest level since June 2020 and the largest month-on-month cut in over 20 years.
Independent Chinese refiners have bought some of the discounted cargoes in recent weeks, traders say. China's crude purchases fell in June to 5.84 million bpd, the lowest level in more than a decade, as refiners held back amid high prices and volatility. ADNOC has sold cargoes into markets where it has traditionally had only a limited presence, including Nigeria, Turkey and the US West Coast.
OPEC+ adds barrels as a surplus builds
Seven OPEC and allied producers, including Russia, agreed on Sunday to raise output by a further 188,000 bpd from August, bringing the group's cumulative production increases since the war began to almost 800,000 bpd. The International Energy Agency forecasts that global oil supply will exceed demand by 5 million bpd next year. Brent crude has fallen to around $70 a barrel, nearly $50 below the wartime peak of $118.
Iraq has already discussed leaving OPEC if the group does not let Baghdad raise output significantly.
