Kuwait, the World’s No. 5 Oil Producer, Cuts Output as Crude Nears $100 a Barrel [US–Iran War]

Reporter Lee Byung-chul of The Financial News in New York City reported that as Kuwait, Iraq and several other Gulf oil producers begin cutting crude output, international oil prices, which have already climbed above $90 a barrel, are expected to easily surpass $100 a barrel within a week.
The Trump administration in the United States has announced a range of measures to try to cool the surge in oil prices, but market skepticism is mounting. Analysts warn that any steps will be only stopgaps unless the Strait of Hormuz, through which 20% of the world’s oil and natural gas flows, is reopened. Some have even cautioned that international crude prices could soon reach $150 a barrel.
Kuwait Petroleum Corporation (KPC), the state-owned oil company of Kuwait, said on the 7th local time, "Because tankers cannot pass through the Persian Gulf, we have reduced oil production and refining." It did not disclose the size of the cuts. As of January this year, Kuwait produced about 2.6 million barrels of oil per day, making it the fifth-largest producer within the Organization of the Petroleum Exporting Countries (OPEC).
Iraq also stated that since the 28th of last month it has been cutting production by 1.5 million barrels a day, including 700,000 barrels a day from Rumaila oil field, the country’s largest. Iraqi authorities added the same day that within a few days they will have to reduce daily output by 3 million barrels. Goldman Sachs forecast that oil prices could break through $100 a barrel within a week. It stressed that the key is lifting the blockade of the Strait of Hormuz, warning, "If the blockade continues, Brent crude oil is highly likely to exceed $147 a barrel, as it did in 2008 and 2022." JPMorgan Chase & Co. also projected that "by next weekend, total production cuts could reach 6 million barrels a day."
The seriousness of the situation lies in the fact that not only Kuwait and Iraq but all other Gulf oil producers will have little choice but to start cutting output within two to three weeks. Because tankers cannot enter Gulf waters, crude storage facilities are filling up, forcing producers to scale back production. Oil fields can take months to return to normal once shut down, so even if the strait blockade is lifted, crude supply will not rebound immediately. A temporary shortage of oil is likely to inflict prolonged damage on the global economy.Energy consulting firm Kpler pointed out that Kuwait will have to further reduce production within a few days, and that major storage facilities in Saudi Arabia and the United Arab Emirates (UAE) are also filling rapidly, meaning all of these countries will hit storage limits within three weeks. Iran’s indiscriminate drone and missile attacks on neighboring Gulf countries are also accelerating the shutdown of oil and gas production. Qatar, the world’s second-largest producer of liquefied natural gas (LNG), invoked a force majeure clause and halted supplies after its largest LNG production facility was hit by Iranian drone strikes. Saad Sherida al-Kaabi, Qatar’s minister of energy, also warned on the 6th that because of the blockade of the Strait of Hormuz and Iran’s attacks, all Gulf energy producers will be forced to suspend exports within a few weeks and oil prices could soar to around $150 a barrel. He added that disruptions to maritime trade through the Strait of Hormuz will also hurt many industrial sectors, noting that the region produces significant volumes of petrochemicals and fertilizers.
Meanwhile, with no sign that the situation will calm down in the short term, U.S. President Donald Trump declared his willingness to fight a medium- to long-term war, saying, "The only agreement with Iran will be unconditional surrender."
pride@fnnews.com Reporter