UAE, Kuwait Cut Oil Output After Iran Blockades Strait of Hormuz

The United Arab Emirates (UAE) and Kuwait started reducing oil production as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply, Fiona MacDonald and Anthony Di Paola reported for Bloomberg News.

Kuwait’s oil cutback started with about 100,000 barrels a day. (Photo: RIckmaj, Wikimedia Commons) 

Abu Dhabi National Oil Co. said it is “managing offshore production levels to address storage requirements,” without giving further details. Kuwait Petroleum Corp. said it was lowering production at both its oil fields and refineries after

“Iranian threats against safe passage of ships through the Strait of Hormuz.”

The war in the Middle East has all but closed Hormuz — the narrow waterway linking the Persian Gulf to the open seas — to maritime traffic following Iranian threats to shipping.

That has clogged exports from the world’s top oil-producing region and helped drive prices in London to the highest close in more than two years at almost $93 a barrel, sending consumers searching for alternatives and threatening to push global inflation higher.

Kuwait’s oil cutback started with about 100,000 barrels a day as of early Saturday and is expected to almost triple, with further gradual reductions depending on storage levels and the status of Hormuz, a person with direct knowledge of the plan said, asking not to be named because the details are private.

The UAE, which pumped more than 3.5 million barrels a day as OPEC’s third-biggest producer in January, is using export capacity that bypasses the Strait of Hormuz and its international storage facilities to ensure supply to global markets.

ADNOC operates a 1.5-million-barrel-a-day pipeline to Fujairah on the UAE’s western coast to avoid the strait. ADNOC said its onshore operations are continuing normally.