Saudi Arabia has taken the unusual step of increasing oil production beyond its OPEC+ quota, joining other Gulf countries in ramping up exports amid rising tensions between Iran and Israel. This rare move, confirmed by the International Energy Agency (IEA), signals a major shift in the kingdom’s oil policy and adds to growing concerns of a global supply glut.
In June, Saudi oil output surged by about 700,000 barrels per day (bpd) to reach 9.8 million bpd. The majority of that increase—around 70%—was exported, according to the IEA’s latest monthly update. Riyadh, long seen as the group’s production enforcer, has now joined countries like Iraq, Kuwait, and the UAE in exceeding output targets.
Meanwhile, Iran’s oil production fell by 400,000 bpd during the same period, dropping to just over 3 million bpd. Despite the regional conflict, its infrastructure has remained largely intact.
The boost in Gulf production comes at a time when oil markets are already under pressure. Demand growth has slowed sharply, with the IEA projecting a modest 700,000 bpd increase for the year—the weakest pace since 2009, excluding the COVID-19 crash. At the same time, major producers outside OPEC+, including the U.S., Brazil, Guyana, and Canada, are increasing output at twice that rate.
As a result, oil prices have slipped despite the geopolitical turmoil. Brent crude has dropped by about 13% since mid-June, now trading near $69 a barrel. Analysts point to oversupply worries and economic uncertainty, including fallout from a renewed trade war under President Trump.
The IEA suggests that Saudi Arabia’s decision may be driven by multiple factors—possibly to discipline fellow OPEC+ members who have been overproducing or to claw back market share lost during years of supply cuts.
While some market signals still suggest tightness—such as strong refining margins and short-term pricing spreads—the agency warns that surplus oil is piling up. Inventories are expected to grow by 2 million bpd in the last quarter of 2025 and even faster in early 2026, which could further drag prices down.
Despite the recent increase, OPEC+ plans to restore another 548,000 bpd in September as part of a phased comeback of previously curbed supplies. After that, the group is expected to pause and reevaluate before deciding on next steps.
