Middle East Crude Oil "Production Cut Wave": UAE and Kuwait Announce Output Reductions

The near-blockade of the Strait of Hormuz is triggering a chain reaction of production cuts among Middle Eastern oil-producing countries, putting global energy supplies under severe pressure.

Abu Dhabi National Oil Company (Adnoc) and Kuwait Petroleum have announced successive production cuts. The former stated it is “adjusting offshore production levels to meet storage demand,” while the latter explicitly attributed the cut to “Iran’s threats to the safe passage of ships through the Strait of Hormuz.”

This wave of production cuts has pushed Brent crude oil prices to their highest closing levels in over two years, surpassing $93 per barrel, increasing global inflation pressures. Previously, Wall Street Journal reported that JPMorgan said the Middle Eastern oil producers’ “production halt” is spreading rapidly, and if fully halted, oil prices could surge by $30.

Earlier this week, Iraq began limiting production due to tank saturation, Saudi Arabia’s largest refinery was shut down after a drone attack, and Qatar’s largest liquefied natural gas export facility has also ceased operations. Decisions by the UAE and Kuwait to cut production are among the latest emergency measures by Middle Eastern oil producers.

Kuwait declares force majeure, with expected production cuts expanding to 300,000 barrels per day

Kuwait Petroleum has officially declared force majeure (a legal clause allowing companies to be exempt from contractual obligations under uncontrollable circumstances) covering the sale of oil and refined products.

According to Bloomberg, citing informed sources, Kuwait’s production cut started earlier Saturday at about 100,000 barrels per day and is expected to expand to nearly three times that amount on Sunday, with subsequent cuts depending on storage levels and the situation in Hormuz.

Kuwait’s crude oil production in January was about 2.57 million barrels per day. Since the country’s only export route relies on the Strait of Hormuz, if the strait remains blocked, its storage capacity will be exhausted within weeks or even days.

Kuwait has already taken the lead in reducing refinery processing loads, with its three refineries—Al-Zour, Mina Al-Ahmadi, and Mina Abdullah—totaling approximately 1.4 million barrels per day of processing capacity. Among them, Al-Zour is one of the largest oil product processing facilities in the Middle East.

UAE announces adjustment of offshore production levels to meet storage needs

As the third-largest oil producer in OPEC, the UAE’s daily output in January exceeded 3.5 million barrels. Adnoc announced it is “adjusting offshore production levels to meet storage demand.” The UAE has alternative routes bypassing the Strait of Hormuz, but these cannot fully replace the strait.

Adnoc operates a pipeline with a capacity of 1.5 million barrels per day directly to Fujairah on the UAE’s west coast, which can maintain partial exports if the strait is blocked. Adnoc stated its onshore operations are currently normal and is utilizing international storage facilities to ensure supply to global markets.

Saudi Arabia, the region’s largest oil producer, has also rerouted some crude to Yanbu on the Red Sea coast to avoid the Hormuz risk.

Hormuz blockade impacts global energy markets

The Strait of Hormuz is a vital chokepoint connecting the Persian Gulf to open seas and is a core route for global crude oil exports. Due to Middle Eastern conflicts and Iran’s threats against passing ships, this waterway has nearly closed, severely disrupting exports from the world’s most important oil-producing region.

London Brent crude futures rose to $93 per barrel, reaching a two-year high, prompting consuming countries to seek alternative sources and increasing global inflation risks.

Gulf countries such as the UAE and Kuwait have become primary targets of Iran’s missile and drone attacks during this conflict. The US embassy in Kuwait was attacked, and the US consulate in Dubai was also targeted, with multiple infrastructure damages in both countries.

Trump: Oil prices will eventually fall back

President Trump told reporters on Air Force One on Saturday that when asked if he’s worried about gasoline prices, “Not worried.”

He expects oil prices to drop significantly after the conflict ends. He characterized the current situation as “a small-scale operation” and said it “may last for a while.”

“We anticipated oil prices would rise, and they did,” Trump said, “but prices will come down, and very quickly.”

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