Report: Saudi Arabia will cut production by 2 million barrels per day in response to the blockade of the Strait of Hormuz.

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Saudi Arabia has lowered its crude oil production by about 2 million barrels per day to around 8 million barrels per day amid blockade at the Strait of Hormuz and disruptions to regional supply chains, further tightening supply expectations in the world’s most critical export region.

According to a Reuters report on March 13, two sources said Saudi output had dropped to around 8 million barrels per day—one of them said it was below 8 million barrels per day—after shutting down two major offshore oil fields against the backdrop of war in Iran.

The pressure on supply does not stem from Saudi Arabia alone. The International Energy Agency stated in a report released Thursday that, including Saudi Arabia, Gulf oil producers have collectively cut output by at least 10 million barrels per day, and warned losses may further expand if shipping flows are not restored quickly.

Iran, meanwhile, said the world should prepare for oil prices at $200 per barrel. For investors, Saudi Arabia’s rapid switch from emergency production increase in February to major output cut highlights how the blockade has turned risks to physical movement into practical constraints.

Shutdown of Two Major Offshore Oil Fields, Pipeline Route Limited

According to a source cited by Reuters, the direct cause of the production cut was the consecutive shutdowns of the Safaniya and Zuluf offshore oil fields. The combined daily output of these two fields exceeds 2 million barrels, mainly heavy and medium-heavy crude oil.

Saudi Arabia is currently diverting more oil through land pipelines to the port of Yanbu on the Red Sea coast to bypass the Strait of Hormuz.

However, this pipeline mainly transports light crude oil and cannot absorb the heavy oil released by the shutdown of the two offshore fields, making it difficult to fully compensate for the loss in production.

Significant Production Cut, Contrasts Earlier Emergency Increase

The context of this production cut sharply contrasts with Saudi Arabia's previous production increase strategy.

Reuters reports that in February, Saudi Arabia launched an emergency plan to increase production, pushing daily supply to 10.11 million barrels and output to 10.88 million barrels per day, aiming to reserve buffer space in anticipation of Middle East supply disruptions after U.S.-Israeli strikes against Iran.

Now, a production level of 8 million barrels per day means Saudi daily supply has dropped by more than 2 million barrels from the February peak, and previous emergency reserves have been almost offset by actual supply interruptions from geopolitical conflict.

Overall Gulf Supply Impacted, IEA Issues Warning

Since February 28, when the U.S. and Israel began air strikes against Iran, Iran has blockaded the Strait of Hormuz, which connects the Persian Gulf and the Arabian Sea—a narrow waterway that is one of the world’s most important oil transportation routes.

The IEA report on Thursday pointed out that Gulf oil producers have collectively cut output by at least 10 million barrels per day. The report also emphasized that if shipping flow cannot recover quickly, production losses will continue to expand, putting profound pressure on the global energy market.

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