Kuwait, UAE seen at risk of oil output cuts next
Analysts warn Kuwait and the UAE may be the next Gulf producers forced to cut oil output if Strait of Hormuz exports stay blocked
Amid the war in the Middle East, Kuwait and the United Arab Emirates could be the next Gulf oil producers forced to reduce output if they are unable to export crude through the Strait of Hormuz, according to analysts, traders and industry sources.
Reuters reported that shipping through the Strait of Hormuz — the narrow chokepoint between Iran and Oman through which about one-fifth of the world’s crude oil and liquefied natural gas passes — has ground to a near halt after Iranian attacks on at least six vessels since the crisis began.
Earlier this week, Iraqi oil officials told Reuters that Iraq had already cut oil production by nearly 1.5 million barrels per day, and that those cuts could widen to more than 3 million barrels per day within days as the country runs out of storage and remains unable to export crude because of the crisis.
Kuwait Petroleum Corporation (KPC) did not immediately respond to questions about whether production shutdowns might be imminent.
Meanwhile, Abu Dhabi National Oil Company (ADNOC) said only that the operations of its listed subsidiaries were continuing as normal, according to statements issued on Wednesday.
Chokepoint pressure builds
Analysts at JPMorgan said in a report this week that Kuwait has around 18 days before output would need to be curtailed as storage tanks fill up, while the UAE has around 22 days, assuming tankers cannot be rerouted. The estimates were calculated from the first day of the conflict.
However, two oil traders dealing in UAE crude said Abu Dhabi may need to reduce production even earlier than that if exports through the Strait of Hormuz do not resume.
“At some point soon, everyone will also shut in if vessels do not come,” a source at a state oil company in the region said.
Ship-tracking data from Vortexa and Kpler showed that about 300 oil tankers remained inside the Strait of Hormuz, while vessel traffic in and out of the chokepoint had almost stopped since the outbreak of war. The figures exclude some of the smallest tankers.
The latest warnings have raised concerns that the conflict could further tighten global energy supply and intensify pressure on oil prices, as more Gulf producers face the risk of being unable to move crude out of the region.
