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The United Arab Emirates and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. \u00a0<\/p>\n
Abu Dhabi National Oil Co. is \u201cmanaging offshore production levels to address storage requirements,\u201d the company said in a statement, without giving details. Kuwait Petroleum Corp. said it was lowering production at both its oil fields and refineries after \u201cIranian threats against safe passage of ships through the Strait of Hormuz.\u201d<\/p>\n
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\u2019s clogged up exports from the world\u2019s 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. \u00a0\u00a0<\/p>\n
Kuwait\u2019s oil cutback started with about 100,000 barrels a day as of early Saturday and is expected to almost triple on Sunday, 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.<\/p>\n
The UAE, which pumped more than 3.5 million barrels a day as OPEC\u2019s 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\u2019s western coast to avoid the strait. Adnoc said its onshore operations are continuing normally.\u00a0<\/p>\n
Cutbacks by the two OPEC members follow a swathe of others in the region. Iraq started holding back\u00a0production\u00a0earlier this week as storage tanks started filling up, while Saudi Arabia\u00a0shut its biggest refinery\u00a0and Qatar\u00a0closed\u00a0the world\u2019s largest liquefied natural gas export plant after drone attacks.<\/p>\n
Force Majeure<\/p>\n
Kuwait Petroleum declared force majeure \u2014 a legal clause allowing a company not to fulfill contractual obligations because of circumstances outside its control \u2014 on sales of oil and refinery products, according to a notice seen by Bloomberg.<\/p>\n
The country produced about 2.57 million barrels a day of oil in January, according to data compiled by Bloomberg. The only route out for the supply is through the Strait of Hormuz. Saudi Arabia, the biggest producer in the region, has\u00a0diverted\u00a0some of its crude away from this route toward Yanbu in the Red Sea.<\/p>\n
Kuwait had earlier begun lowering processing rates at its refineries because of the fuller tanks. The nation\u2019s plants \u2014 Al-Zour, Mina Al-Ahmadi and Mina Abdullah \u2014 have a combined capacity of about 1.4 million barrels a day. Al-Zour is one of the biggest oil-processing facilities in the Middle East.<\/p>\n
US President Donald Trump said he expects crude prices to drop at the end of the war, which he called a \u201cminor excursion\u201d that\u2019s likely to continue \u201cfor a little while.\u201d<\/p>\n
\u201cWe figured oil prices would go up, which they will,\u201d Trump told reporters aboard Air Force One on Saturday. \u201cThey\u2019ll also come down. They\u2019ll come down very fast. And we will have gotten rid of a major, major cancer on the face of the Earth.\u201d<\/p>\n
Also read:\u00a0Trump Says US May Target New Parts of Iran in Escalating War<\/p>\n
The UAE and Kuwait, like other Gulf nations, have been heavily targeted by Iranian missiles and drones in the region\u2019s expanding war. The US embassy in Kuwait has been hit and the US consulate in Dubai targeted, along with other infrastructure in the two countries.<\/p>\n
#UAE #Kuwait #start #oil #output #cuts #Hormuz #blockage<\/p>\n","protected":false},"excerpt":{"rendered":"
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