- Saudi Arabia's crude oil exports in April significantly dropped from 4.974 million barrels per day in March to 3.990 million barrels per day, marking the second consecutive month of decline and setting a new record low in the history of the Joint Organizations Data Initiative (JODI) statistics.
- Due to the spread of geopolitical conflicts and restricted transportation through the Strait of Hormuz, Saudi Arabia's crude oil production fell from 6.967 million barrels per day in March to 6.316 million barrels per day in April, also setting a historical low.
- The alternative land oil pipeline, intended to bypass the Strait of Hormuz, faced temporary disruptions due to attacks on pumping stations along the east-west oil pipeline, further exacerbating the decline in crude oil deliveries to the global market that month.
Geopolitical Conflicts Block Key Shipping Routes
The latest data released by the Joint Organizations Data Initiative (JODI) on Monday shows that the supply chain situation in the Middle East is continuously exerting extreme pressure on the energy supply chain. Affected by Iran-related military conflicts and comprehensive shipping obstructions in the Gulf region, Saudi Arabia's oil exports and production have both hit historical lows. According to preliminary assessments by the International Energy Agency (IEA), since the escalation of conflicts in late February, geopolitical confrontations have substantially hindered over 14 million barrels per day of conventional oil production in the Middle East, leading to a phase of structural reshaping in the global oil supply.
Setbacks in Alternative Routes and Declining Capacity
Giovanni Staunovo, a commodities analyst at UBS, pointed out that the restricted shipping through the Strait of Hormuz is the core external factor causing the dual decline in Saudi production and sales. More strategically impactful is the attack on pumping stations of the east-west oil pipeline, originally used by Saudi Arabia to hedge against the strait's risks, leading to a temporary halt in the logistics capacity of this critical alternative route. The compounded negative supply shocks directly resulted in Saudi Arabia's crude oil shipments falling below the 4 million barrels per day mark in April.
Domestic Refinery Processing and Direct Burning Fluctuations
While exports are under extreme pressure, Saudi Arabia's domestic energy utilization structure also showed unusual fluctuations. In April, the crude oil processing volume at Saudi refineries slightly decreased by 55,000 barrels per day from March, reaching 2.211 million barrels per day. However, due to the approaching summer's power generation demand and adjustments in the internal supply chain, the direct burning of crude oil surged by 210,000 barrels per day, reaching 540,000 barrels per day. This rise in internal consumption has somewhat squeezed the already limited overseas supply share.
Diplomatic Negotiations and Future Risk Pricing
Although the first round of diplomatic negotiations between the US and Iran reportedly made encouraging progress according to mediators, the situation at the Lebanese border and the actual safety of passage through the Strait of Hormuz remain highly tense. Commodity research institutions generally believe that if geopolitical risk premiums cannot be effectively dissipated, or if the repair progress of the east-west pipeline is slower than expected, global energy supply will continue to be under pressure in the third quarter. Conversely, if a peace agreement is reached and the main shipping routes are reopened, market pricing may face a phase of reevaluation.
