Saudi Oil Output Falls to Year Low on Houthi Embargo

Saudi Arabia’s oil production fell to its lowest level this year in August after Iran-backed Houthi rebels in Yemen threatened shipments from the kingdom’s west coast, forcing the world’s largest exporter to curtail output. The kingdom told OPEC it produced 6.2 million barrels a day in August, the lowest monthly figure in 2026 and 23 percent lower than in July, according to a report published by the oil cartel on Thursday. The decline underscores how the regional conflict has directly impaired the country’s ability to move crude to international markets.

The Houthis announced a “maritime embargo” against Saudi Arabia’s ports at the end of July, deterring ship operators from the area and reducing the country’s export capacity. With limited storage capacity, Saudi Arabia has been forced to reduce production rather than accumulate unsold barrels. Crude exports fell to about 3.1 million barrels a day in August, down from 5.1 million barrels a day in July, the lowest level since at least 2013, according to data from Kpler.

The disruption has hit the kingdom’s main workaround for exporting oil without shipping through the Strait of Hormuz, the narrow waterway that carries a significant share of global crude. Soon after the conflict erupted in late February, state-run Saudi Aramco began piping as much crude as possible to the Red Sea port of Yanbu for export. That strategy helped the country partially restore production to about 80 percent of its normal volumes. As OPEC’s largest producer and the world’s biggest oil exporter, Saudi Arabian output has an outsized impact on global markets, and any sustained reduction carries immediate price consequences.

Analysts say curtailed Red Sea exports are set to continue as the Houthis have stepped up their strikes on Saudi oil infrastructure this week, hitting multiple energy facilities in a wave of attacks on Tuesday. The escalation signals that the threat is not easing and that the kingdom’s western export route remains vulnerable. In response, Brent crude, the international benchmark, rose above $100 a barrel on Wednesday for the first time since July, and was trading at about $102 a barrel on Thursday.

The episode highlights the fragility of the kingdom’s export architecture. The Yanbu pipeline was designed to provide redundancy against disruptions at Hormuz, but it now sits within range of a hostile actor with the demonstrated ability to target Saudi energy assets. The Houthis’ decision to enter the conflict has effectively neutralized that redundancy, leaving the kingdom with fewer options to maintain export volumes. The forced production cut also carries fiscal implications for Riyadh, which relies on oil revenue to fund ambitious economic diversification plans, though the simultaneous rise in prices partially offsets the loss in volume.

For oil markets, the key question is whether the disruption is temporary or structural. If Houthi attacks persist and shipping remains deterred, Saudi Arabia may have to sustain reduced output for an extended period, tightening global supply at a time when spare capacity is already limited. The price move above $100 reflects that risk, and traders are likely to remain attentive to any further escalation. The situation also raises broader concerns about the security of Red Sea shipping lanes, which have become a central chokepoint in the conflict. Until the threat recedes, the kingdom’s production capacity is effectively capped by the security situation on its western coast, and the market will have to price in that constraint.