Kuwait cuts oil production as US-Gulf energy assets come under heavy Iranian fire

The Gulf state will be forced to continue cutting output over the coming days due to limited storage space  

News Desk - The Cradle 

Kuwait has started to cut production at some of its oil fields due to limited storage sites, the Wall Street Journal (WSJ) reported on 6 March, following several Iranian strikes on US energy assets across the Gulf.

The Gulf state is “discussing limiting its production and refining capacity further, to just what it needs to cover domestic consumption,” sources told the outlet. 

According to data provider Kpler, there are indications that production is already being cut. Kpler said Kuwait will be forced to cut more of its energy output in the coming days, adding that storage will fill up in around 12 days.

Closing oil wells is risky due to high restart costs and the damage caused to reservoir pressure. Once production is shut down, restarting could take several days or even weeks. 

“It will not be all back the same day exports are possible again,” a commodity strategist at UBS told WSJ. “Storage is limited … and the only fix to avoid tanks running over is to curb production. The longer the strait stays closed, the more barrels of crude and refined products will be missing, leading to higher prices.” 

International oil benchmark Brent Crude Futures is now trading at $90 a barrel, up 25 percent since the start of the US-Israeli aggression on Iran and Tehran’s retaliatory operations.

It is expected by some analysts to surge to $100. 

Kuwait’s move comes after Iraq announced that it would be cutting production by half.  

“Saudi Arabia has much larger storage capacity and can bypass the Strait of Hormuz via pipeline – but only up to a point, since it also has much higher production and exports,” the report adds. “As a result, Saudi Arabia has been rerouting more of its crude exports to the Red Sea port of Yanbu. The Saudi Red Sea system can only partially offset disruption in the Gulf.”

On 4 March, Reuters reported that Qatar declared “force majeure” and announced the complete shutdown of key liquefied natural gas (LNG) export facilities, putting roughly a fifth of global LNG supply at risk if the disruption persists.

Saudi Aramco also suspended operations at the Ras Tanura refinery, the world’s largest oil refining complex, after a drone strike on 2 March triggered a fire. Tehran denied this strike, calling it an Israeli “false flag.”

Iran has been launching non-stop drone and missile operations against Israeli targets and US bases in the Gulf, in response to the unprovoked war initiated by Washington and Tel Aviv against Tehran days ago. US-linked energy interests across the Gulf have been pounded hard by the Islamic Republic. 

Soar Atlas has obtained new, very high-resolution satellite imagery of the Fujairah Oil Industry Zone in the UAE from 5 March.

The images show two oil tanks engulfed in flames, with workers spraying water to cool nearby tanks, while another tank appears to have already been destroyed.