The UAE and Kuwait have begun cutting back on oil output, as the near-shutdown of the vital Strait of Hormuz sends shockwaves through energy markets and impacts worldwide supply.
Abu Dhabi National Oil Co. stated it is “adjusting offshore production to manage storage needs,” without providing specifics. Kuwait Petroleum Corp. announced it was reducing output at its oil fields and refineries following “Iranian threats to the secure movement of vessels through the Strait of Hormuz.”
The Middle East conflict has effectively shut down Hormuz, the narrow channel connecting the Persian Gulf to international waters, to ship traffic after Iran threatened shipping. This has blocked exports from the globe’s leading oil-producing area and contributed to pushing London prices to their highest settlement in over two years at nearly $93 per barrel, forcing consumers to seek alternatives and risking a rise in worldwide inflation.
Kuwait’s reduction in oil output began at approximately 100,000 barrels daily as of early Saturday and is anticipated to nearly triple by Sunday, with additional gradual cutbacks contingent on storage capacity and Hormuz conditions, according to an informed source who requested anonymity due to the confidential nature of the information.
The UAE, which produced over 3.5 million barrels per day as OPEC’s third-largest producer in January, is utilizing export routes that circumvent the Strait of Hormuz, along with its global storage sites, to maintain deliveries to international markets. Adnoc runs a 1.5 million barrel-per-day pipeline to Fujairah on the UAE’s western seaboard to bypass the strait. Adnoc reported its land-based operations are proceeding as usual.
The reductions by these two OPEC nations follow numerous other cutbacks across the region. Iraq began curbing output earlier this week as storage facilities reached capacity, while Saudi Arabia and Qatar the world’s largest liquefied natural gas export plant after drone attacks.
Force Majeure
Kuwait Petroleum invoked force majeure — a legal provision that permits a firm to avoid meeting contractual commitments due to events beyond its control — on its oil and refined product sales, based on a notice viewed by Bloomberg.
The country generated approximately 2.57 million barrels per day of oil in January, per Bloomberg-compiled data. The sole outlet for this supply is via the Strait of Hormuz. Saudi Arabia, the region’s top producer, has some of its crude away from this path toward Yanbu in the Red.
Kuwait had previously started reducing processing rates at its refineries due to full storage tanks. The country’s facilities — Al-Zour, Mina Al-Ahmadi and Mina Abdullah — together have capacity of roughly 1.4 million barrels daily. Al-Zour ranks among the largest oil-processing installations in the Middle East.
US President Donald Trump stated he anticipates crude prices will fall once the war concludes, describing the conflict as a “minor excursion” that will probably persist “for a little while.”
“We expected oil prices would rise, which they will,” Trump told journalists on Air Force One Saturday. “But they’ll also fall. They’ll drop very quickly. And we will have eliminated a major, major cancer from the face of the Earth.”
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The UAE and Kuwait, along with other Gulf states, have faced heavy attacks from Iranian missiles and drones amid the region’s widening war. The US embassy in Kuwait was struck and the US consulate in Dubai was targeted, in addition to other infrastructure in both nations.