Riyadh turned on the taps early
Saudi Arabia ramped up crude oil production by nearly 800,000 barrels a day in February, weeks before U.S. and Israeli forces launched strikes against Iran on February 28, according to OPEC's latest monthly oil market report published Tuesday.
The kingdom told OPEC it pumped 10.882 million barrels per day last month, up sharply from 10.1 million in January. Crude shipments jumped to 7.3 million barrels a day in the first 24 days of February, the highest export level since April 2023, according to tanker-tracking data.
Brent crude traded at $101.14 per barrel on Wednesday, while WTI crude settled near $96.25.
A contingency plan, or advance warning?
The timing raises questions. Saudi officials described the move as a contingency plan designed to offset potential supply losses if U.S. military action disrupted Middle East shipping lanes. The kingdom positioned itself as a reliable swing producer capable of filling any gap.
But the scale of the increase, nearly 8% in a single month, went well beyond what OPEC+ had agreed to. The group voted to hold output targets steady through the first quarter of 2026, yet Riyadh pushed production to levels not seen in over a year.
Saudi supply to the market was reported at 10.111 million barrels per day, close to its OPEC+ quota. The gap between production and supply suggests the kingdom was filling domestic storage, building a buffer against exactly the kind of disruption that arrived days later.
OPEC+ had already agreed to hold steady
The February production surge is striking because OPEC+ had paused its output unwinding program for the first quarter, citing oversupply risks. The alliance had been gradually adding 137,000 barrels per day each month from October through December 2025 before hitting the brakes.
On March 1, just days after the strikes began, OPEC+ approved a bigger-than-expected increase of 206,000 barrels a day for April. Combined OPEC+ production averaged 42.72 million barrels per day in February, a 445,000 barrel-per-day jump from January. Saudi Arabia accounted for the bulk of that gain.
The kingdom's spare capacity advantage
Saudi Arabia controls roughly 2.4 million barrels per day of spare capacity that can bypass the Strait of Hormuz entirely via the East-West Pipeline running from the Gulf coast to the Red Sea port of Yanbu. That infrastructure gives Riyadh an edge no other Gulf producer can match.
Iran, for its part, was pumping around 3.2 million barrels per day before the conflict, roughly 3% of global supply. Tehran has continued shipping crude to China through the strait it effectively closed to everyone else, maintaining exports at about 1.22 million barrels a day according to commodity data provider Kpler.
Market still watching
OPEC held its 2026 global oil demand growth forecast steady at 1.38 million barrels per day, noting that "geopolitical developments warrant close monitoring" but that their impact on the forecast "may be too early to determine."
Traders are less patient. With Brent above $100 and the Strait of Hormuz still largely shut, the question is whether Saudi Arabia's early move bought enough of a cushion, or whether the world's spare capacity is already spoken for.