Petrochemical-rich nations in the Middle East are ramping up crude oil exports as they prepare for possible US military action against Iran, which could disrupt oil transport in the Gulf region.
Saudi Arabia has reportedly increased its oil exports to about 7 million barrels a day this month, the highest rate recorded this year. Meanwhile, the United Arab Emirates (UAE) is on track to reach a record export level of 3.5 million barrels per day in February, according to data firm Kpler.
Iranian officials have warned of potential repercussions should President Trump proceed with military strikes, suggesting they could take measures to block oil tankers in the Strait of Hormuz, a crucial passage for around 20% of the world’s seaborne oil. Such actions could significantly impact global oil markets.
In light of these tensions, representatives from Iran and the US are scheduled to meet in Geneva for talks aimed at avoiding conflict, but major oil-exporting nations in the Middle East are already putting plans in place to ensure the uninterrupted flow of oil, at least temporarily.
Richard Bronze, a geopolitics analyst at Energy Aspects, noted these measures are “precautionary steps” to ensure that major oil producers like Saudi Aramco can continue to supply customers despite rising geopolitical risks.
While representatives from Saudi Arabia and the UAE’s energy ministries were unavailable for comment, Aramco did not respond to requests for information.
President Trump has been fortifying US military presence in the Middle East, warning Iran last week that they have roughly 15 days to negotiate a deal before facing serious consequences.
By moving crude oil closer to major consumption points, Middle Eastern producers aim to mitigate the effects of any supply disruptions. These countries heavily depend on oil sales to fuel their economies.
The market is closely monitoring any production decisions by Saudi Arabia and the UAE, as they are leading members of OPEC. Last year, Saudi Arabia adopted a similar strategy prior to an Israeli attack on Iran, justifying increased exports as not affecting global markets since the additional barrels were not available to buyers.
Analysts are viewing the current surge in exports as a repeat of that strategy. According to Bob McNally, president of Rapidan Energy Group, “June is the playbook, and during that time [Saudi Arabia] just increased production.”
He emphasized that this is a delicate balancing act that typically doesn’t happen often but highlights the seriousness of the current situation.
Meanwhile, Iran is also attempting to maximize its oil exports as tensions rise, with crude and condensate loadings climbing to 2.2 million barrels per day in February, significantly higher than the average for the previous three months.