Saudi Arabia: Saudi output unlikely to reach peak levels until 2027
Latest reading: Brent crude oil prices averaged USD 73.23 per barrel in December, down 0.4% from November. On 31 December, the commodity traded at USD 74.74 per barrel, up 2.1% from 29 November. Prices were broadly stable as trading volumes fell due to the holiday period.
Turning to production, Saudi oil output came in at 8.94 mbpd (million barrels per day) in December, largely unchanged from 8.96 mbpd in November and remaining at one of the lowest levels of the past decade. December’s print means Saudi oil output fell 6.6% over 2024 as a whole, a slightly smaller decline than 2023’s 8.7% drop, but still the second-sharpest in the last decade.
Outlook: Our Consensus is for Saudi Arabia’s production of crude oil to rise for the first time in three years in 2025. That said, average annual output will remain below 2022’s peak of 10.53 mbpd until 2027; in December 2024, Saudi Arabia agreed with its OPEC+ allies to postpone raising quotas until April 2025 and to phase in the increase over 18 months instead of 12, as originally planned.
In more recent news, in mid-January, the International Energy Agency said it sees a narrower supply surplus in 2025 than earlier projected, boding well for oil prices and therefore Saudi government coffers. The multilateral organization said it now expects world inventories to rise 0.73 mbpd instead of 0.95 mbpd, amid stronger demand and new risks to supply.