Crude oil production by the Organisation of Petroleum Exporting Countries (OPEC) fell by the largest margin in at least four decades in March, with conflict in the Middle East severely disrupting exports from key member states, a Bloomberg survey has revealed.
According to the survey, OPEC output plunged by 7.56 million barrels per day, representing a 25 per cent decline to 22 million barrels daily.
The sharp drop coincided with the ongoing war between a U.S.-Israeli alliance and Iran, which has led to the closure of the Strait of Hormuz, a critical chokepoint for global oil transit.
In response, major oil producers including Saudi Arabia, the United Arab Emirates (UAE), and Iraq were forced to slash production drastically.
The March contraction marked the largest single-month decline in Bloomberg’s production data, which extends back to 1989.
While OPEC previously reduced output more over a two-month period in 2020 amid the collapse of global fuel demand during the COVID-19 pandemic, this month’s slump surpassed historic shocks, including the 1973 Arab oil embargo.
That embargo caused a gross supply loss of 5 million barrels per day between October and December 1973, though in a much smaller global oil market, according to Daniel Yergin’s “The Prize: The Epic Quest for Oil, Money & Power.”
The disruptions have sent crude prices soaring.
Brent futures hit nearly $120 per barrel in London last month, with jet fuel, diesel, and petrol prices following suit.
On Tuesday, Brent traded near $110 per barrel as the United States launched attacks on military targets across Iran’s Kharg Island.
President Donald Trump warned of intensified bombardment unless Tehran accepted US terms.
Iraq, the OPEC member most dependent on the Strait of Hormuz, recorded the steepest decline, with production falling by 2.76 million barrels per day to 1.63 million barrels daily.
Despite Iranian assurances that “Brotherly Iraq is exempt from any restrictions” on transit through the strait, ship traffic remains minimal compared with prewar levels.
Saudi Arabia and the UAE also experienced significant output losses, though their ability to reroute exports via alternative pipelines helped mitigate the full impact.
Saudi production fell by 2.07 million barrels per day to 8.36 million, while UAE output dropped by 1.44 million barrels per day to 2.16 million.
Despite the Red Sea export route, Saudi exports declined by approximately 50 per cent in March, according to tanker-tracking data.
The conflict’s ripple effects extend beyond OPEC.
Russia, a leading member of the broader OPEC+ alliance, suffered disruptions after a series of Ukrainian drone attacks targeted oil export terminals on the Baltic Sea.
The key port of Ust-Luga resumed crude loading this week after a halt at the end of March.
Before the outbreak of hostilities, eight major OPEC+ nations were in the process of restoring oil production previously halted for several years.
On April 5, OPEC+ agreed to a symbolic supply increase for May, emphasising that it would take considerable time to restart facilities damaged during the fighting.
Bloomberg’s production survey incorporates ship-tracking data, official sources, and estimates from consultancy groups including Rapidan Energy Group, FGE NexantECA, Kpler, and Rystad Energy.
The unprecedented supply disruptions have sparked concerns of prolonged volatility in global oil markets, with analysts warning that consumers and industries could face sustained price pressures as geopolitical tensions persist.
