State of Kuwait cuts oil production, declares 'force majeure' amid Middle East crisis

[Financial News] The State of Kuwait has decided to cut oil production and declared "force majeure," taking into account the Islamic Republic of Iran’s moves to block the Strait of Hormuz amid the Middle East crisis.
Kuwait Petroleum Corporation (KPC), the State of Kuwait’s national oil company, stated in a press release on the 7th (local time), "As a preventive measure, we are reducing crude oil and refining throughput in response to the Islamic Republic of Iran’s continued attacks on the State of Kuwait and its threats to vessel traffic through the Strait of Hormuz," announcing that it was declaring "force majeure."
A force majeure clause is a mechanism that exempts parties from liability or allows them to delay performance of contractual obligations when uncontrollable events such as war or natural disasters occur.
KPC explained that, as a result of armed clashes between the United States and the State of Israel on one side and the Islamic Republic of Iran on the other, there are currently virtually no vessels transporting crude oil and petroleum products in the Arabian Gulf.
On the 3rd, the Mina Al-Ahmadi Refinery Complex, a key refining facility in the State of Kuwait, came under missile and drone attack originating from the Islamic Republic of Iran, forcing a reduction in petroleum product output. As of January this year, the State of Kuwait’s crude oil production was about 2.6 million barrels per day, with refining capacity of 800,000 barrels per day.
Unlike other oil-producing countries in the Gulf (Persian Gulf region), such as the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE), which have overland export pipelines, the State of Kuwait sits at the innermost part of the Gulf waters in the Persian Gulf. As a result, virtually all of its crude oil and petroleum product exports must pass through the Strait of Hormuz.
Not only the State of Kuwait but also several other Gulf oil producers have halted operations at energy-related facilities following attacks by the Islamic Republic of Iran.
In the Duhok Governorate of the Kurdistan Region of Iraq in northern Iraq, crude output of about 30,000 barrels per day was halted at the Sarsang oil field, operated by United States-based HKN Energy, after it was hit by a drone strike. KSA also temporarily suspended operations at the Ras Tanura complex, which houses the largest refinery of the Saudi Arabian Oil Company (Saudi Aramco), after it came under drone attack.


khj91@fnnews.com Kim Hyun-jung Reporter