Saudi Arabia Hikes Fuel Oil Imports as Hormuz Crisis Hits Gas Output

Key Facts

Saudi Arabia has increased its fuel oil imports to an average of 360,000 barrels per day to compensate for a significant decline in domestic natural gas production. This shift follows a drop in associated gas output after Saudi oil production was slashed by over 3 million barrels daily due to the closure of the Strait of Hormuz, according to reports from Reuters and Rystad Energy.

This operational strain coincides with a slowdown in global industrial activity, as market data from May 18, 2026, showed China's industrial production grew by only 4.1%, missing the 5.9% forecast. Expert analysis suggests that Saudi Aramco's pivot to fuel oil for power generation is a strategic move to prevent grid deficits, despite the higher costs relative to natural gas.

Traders are closely monitoring the Kingdom's ability to sustain these import levels as geopolitical tensions continue to disrupt shipping lanes. Looking ahead, the market awaits the release of U.S. Business Inventories data later today, which may provide further signals on global energy demand, while global industrial production levels remain a key driver for alternative fuel pricing.