HSBC has raised its outlook for Saudi crude production. Meanwhile, JPMorgan says the global oil market has returned to surplus after months of turmoil from the US-Israeli war on Iran.
Driving the news: HSBC now expects Saudi Aramco to pump 8.3 million barrels per day (bpd) in the fourth quarter of 2026. Its earlier estimate stood at 6.3 million bpd. The bank also lifted its 2027 forecast for the Kingdom to 9.8 million bpd, up from 8.8 million bpd. Moreover, it expects output to climb back to about 10 million bpd by mid-2027.
Why it matters: Saudi Arabia is OPEC’s biggest producer and a leading global exporter. Therefore, its output steers prices, supply and energy security from Asia to Europe. A faster recovery gives buyers more confidence.
Exports Edge Back Toward Pre-War Levels
HSBC says Saudi crude exports recovered to about 7 million bpd in October. That figure sits close to pre-war levels. In addition, analysts report that crude shipments through the Strait of Hormuz have returned to near pre-war volumes. However, moving each barrel now costs more.
JPMorgan adds that supply beat demand by about 1.4 million bpd in October. Global crude imports rose to 44.9 million bpd, up 1.3 million bpd from a year earlier. Middle East exports recovered to about 20.7 million bpd, compared with 9.8 million bpd in March. Even so, they remain below pre-war levels.
By the numbers:
- HSBC, Aramco Q4 2026 forecast: 8.3 million bpd, up from 6.3 million bpd.
- HSBC, Saudi 2027 forecast: 9.8 million bpd, up from 8.8 million bpd, with about 10 million bpd by mid-2027.
- Saudi crude exports: about 7 million bpd in October. Standard Chartered estimates exports reached roughly 6.9 million bpd in September, up from 2.45 million bpd in August.
- Global surplus (JPMorgan): about 1.4 million bpd in October.
- Global crude imports: 44.9 million bpd, up 1.3 million bpd year on year
- Middle East exports: about 20.7 million bpd, versus 9.8 million bpd in March.
- East-West pipeline: about 1,200km long, with Saudi Arabia reporting 5.8 million bpd on October 6. Its capacity stands at 7 million bpd.
- Aramco Q3 net profit: SAR135.9 billion ($36.2 billion), versus SAR101 billion ($26.9 billion) a year earlier, a 34.6% rise.
- Gain from the PRefChem stake sale to Petronas: SAR25.9 billion ($6.9 billion).
- Aramco Q3 adjusted net income: about SAR117 billion ($31.2 billion), up 9%.
- Aramco Q3 base dividend: SAR82.1 billion ($21.9 billion), up 3.5% year on year.
- Saudi trade surplus forecast for 2027: SAR410 billion ($109.3 billion), following SAR455 billion ($121.3 billion) in 2026.
The Kingdom’s Weight, and the Hurdles it Navigates
The big picture: Saudi Arabia anchors the oil market. Aramco chief executive Amin Nasser says the company can sustain 12 million bpd of maximum capacity for a year without extra costs. Still, the war has tested logistics in four ways.
Zoom in on Hormuz. The strait once carried roughly one-fifth of global oil trade. Traffic has largely stalled since the war began in late February. As a result, Saudi Arabia built a second route.
Zoom in on the pipeline. The East-West pipeline carries crude from eastern fields to the Red Sea port of Yanbu. Aramco rerouted about 4 million bpd through it. A drone attack on September 10 forced a precautionary shutdown. Crews moved fast. Aramco restarted the line before the month ended, and Yanbu loadings resumed. “Within five or six days, we began using the pipeline again,” Energy Minister Prince Abdulaziz bin Salman said. Independent estimates of daily flows differ, so analysts keep watching the data.
Zoom in on security. Houthi attacks have targeted Saudi energy infrastructure since hostilities resumed in July. Nasser told Nikkei that temporary interruptions usually last “days, not weeks or months.” He also said that geopolitical uncertainty and attacks on key facilities deepened the global supply crunch in the third quarter.
Zoom in on costs. Bottlenecks in the Red Sea and the Gulf of Oman could cap export rates. In addition, soaring shipping costs raise the price of every cargo.
Aramco’s Results Show the Momentum
Aramco’s third-quarter profit climbed despite those pressures. Higher oil prices drove the gain, and the PRefChem stake sale added to it. Furthermore, the board raised the base dividend. Investors therefore saw strong cash generation even in a disrupted market.
What’s next: Saudi Arabia is building a bigger bypass. Nasser says the East-West pipeline will grow by 3 million bpd, although the expansion will take two to three years. Consequently, relief will arrive in stages rather than overnight.
On the calendar: Saudi Arabia and six OPEC+ partners meet on 29 November to settle each member’s maximum sustainable capacity baseline. Meanwhile, OPEC projects 2027 demand growth of 2.55 million bpd, to 108.3 million bpd, as the world rebuilds stocks. Oil prices also moved fast this week. They fell more than 7% on Monday on signs of renewed Tehran-Washington dialogue.
The bottom line: HSBC’s upgrade signals confidence that Saudi output will keep recovering. Pipelines, shipping lanes and diplomacy will set the pace.
