Saudi Arabia, the world’s top crude exporter, is expected to burn more oil for electricity this summer—up to 470,000 bpd, a 3% rise from 2024—as high fuel oil prices and OPEC+’s supply boost make crude a cheaper alternative, analysts say. The move could partially offset fears of a global oil surplus after the cartel agreed to raise output by nearly 1M bpd through June.
Why the Switch to Crude?
- Fuel Oil Becomes Expensive: Refining margins for high-sulfur fuel oil (HSFO) hit a record $4.45/barrel, making crude more economical.
- OPEC+ Output Hike: Saudi’s June quota rises to 9.367M bpd (from 9.034M in April), creating more crude to divert domestically.
- Russian Imports Limited: Discounted Russian fuel oil inflows may not repeat 2023’s record highs.
Market Implications
✅ Short-Term Relief: Higher crude burn could tighten global supply, softening the bearish impact of OPEC+’s production increases.
⚠️ Long-Term Shift: Saudi Arabia is accelerating renewables (6GW new capacity) and Jafurah gas field development, which will curb oil demand for power by 2030.
Analyst Estimates
| Firm | 2024 Crude Burn (bpd) | Trend |
|---|---|---|
| Wood Mackenzie | 465K-470K | ↑ 10K-15K |
| FGE | 423K-428K | Stable to slightly higher |
What’s Next?
- Summer Demand Spike: Crude burn will peak June-August with air conditioning use.
- Gas & Renewables Push: Jafurah gas and solar projects will gradually replace oil in power generation.
Saudi Arabia Shifts to Crude Burn for Power as Fuel Oil Costs Soar, Easing Global Glut Fears