Saudi Arabia, Iran Ramp Up Oil Exports Amid Tensions

Saudi Arabia's crude shipments surged to an average of 7.3 million barrels per day in the first three weeks of February, the highest volume seen since April 2023. This represents a significant jump of more than 400,000 barrels per day compared to January's levels. The export boost is driven by two key factors: a seasonal decline in Saudi Arabia's domestic need for crude oil to generate power and the ongoing, gradual reversal of previous OPEC+ production cuts. The kingdom's output target was raised by 1.125 million barrels a day over the course of 2025, though that process was paused for the first quarter of this year. Iran has also dramatically increased its oil exports, with loadings from its main terminal on Kharg Island nearly tripling in mid-February compared to the previous month. In a six-day period, from February 15 to 20, Iran loaded 20.1 million barrels, a rate equivalent to more than 3 million barrels per day. This surge is viewed as a preemptive move to get crude onto tankers and into floating storage ahead of potential disruptions. Despite U.S. sanctions, Iran maintains its export levels by utilizing a "dark fleet" of tankers and selling at a steep discount, with about 90% of its crude heading to China. The increased flow is not limited to the two rivals. Combined exports from other regional producers, including Iraq, Kuwait, and the United Arab Emirates, are also on track to climb by nearly 600,000 barrels a day from January levels. This activity coincides with the largest U.S. military buildup in the Middle East since 2003. The Pentagon has deployed two aircraft carrier strike groups, led by the USS Abraham Lincoln and the USS Gerald R. Ford, to the region amid the heightened tensions. In a first-ever combat deployment, the U.S. Air Force has also positioned F-22 stealth fighter jets in Israel, adding another layer of military presence. This is in addition to more than 100 other U.S. fighter jets and support aircraft moved to various bases in the region. The rush to export has caused a spike in shipping costs, with tanker freight rates to haul crude from the Middle East to China hitting their highest levels since 2020. Meanwhile, OPEC+ ministers are scheduled to meet soon to decide on production policies for April and beyond.