Saudi Arabia Slashes Crude Burn as OPEC+ Ramps Up Production: What It Means for Oil Markets in 2025

• Why Is Saudi Arabia Reducing Crude Burn?
• How Is OPEC+ Adding Fuel to the Fire?
• China’s Role in the Oil Chess Game
• The Geopolitical Wildcards
• FAQs: Your Oil Market Cheat Sheet

Saudi Arabia’s decision to cut domestic crude burn while OPEC+ increases output is reshaping global oil dynamics. With Brent crude already down 10% this year, analysts warn of a potential glut as supply surges and seasonal demand wanes. Meanwhile, Saudi Aramco’s Jafurah gas project promises to free up hundreds of thousands of barrels for export—just as China’s import appetite and geopolitical risks add volatility. Here’s why traders are bracing for a bumpy ride.

Why Is Saudi Arabia Reducing Crude Burn?

Saudi Arabia burned a staggering 900,000 barrels per day (bpd) of crude for electricity in August 2025—the highest since 2009—as scorching temperatures spiked air conditioning demand. But here’s the twist: Kpler projects a 33% drop by September, falling below 400,000 bpd in October. That’s like suddenly dumping half a million extra barrels daily into an already oversupplied market. "It’s a double whammy," says a BTCC analyst. "Saudi’s cutting local use just as OPEC+ taps the supply faucet."

How Is OPEC+ Adding Fuel to the Fire?

OPEC+ confirmed plans to hike production starting October, betting on robust demand to stabilize prices. But UBS’s Giovanni Staunovo isn’t buying it: "Global oil demand likely peaked in August with cooling Middle East temps and the end of Northern Hemisphere travel season." The numbers back him up—Brent crude slid to $67 this week, and Goldman Sachs predicts lows of $50s in 2026. Even Saudi Aramco’s CEO Amin Nasser admits the Jafurah gas project (launching late 2025) will replace just 35,000 bpd initially—a drop in the ocean compared to the 350,000 bpd export boost expected by 2030.

China’s Role in the Oil Chess Game

Saudi Arabia’s October exports to China will jump to 1.65 million bpd (up from 1.43 million), but traders whisper about a slowdown. "If China blinks, OECD inventories could balloon," warns Staunovo. Meanwhile, U.S. crude stocks unexpectedly grew by 3.9 million barrels last week—another red flag for demand. And let’s not forget Russia: fresh sanctions might further disrupt trade flows. It’s like watching a high-stakes poker game where everyone’s holding weak hands.

The Geopolitical Wildcards

Ukraine tensions and Middle East conflicts loom large, but here’s the irony: even as supply risks mount, the market’s drowning in oil. The IEA warns of a "record surplus by 2026," while OPEC insists demand is steady. Who’s right? Probably both—short-term pain (sliding prices) and long-term gain (Asian demand growth) could coexist. As one veteran trader joked, "The only certainty here is volatility."

FAQs: Your Oil Market Cheat Sheet

How much crude will Saudi Arabia stop burning domestically?

The Jafurah gas project will initially replace 35,000 bpd of crude burn by late 2025, ramping up to 350,000 bpd by 2030 (per Rystad Energy).

Why did U.S. crude inventories surprise traders?

Analysts expected a 1-million-barrel drawdown, but stocksby 3.9 million barrels—hinting at weaker-than-expected demand.