United Arab Emirates (UAE) and Kuwait have begun to cut their oil production amid rising tensions in the Strait of Hormuz, a passage through which around 20% of the world's crude oil circulated. Iran's warnings of attacking ships crossing this strategic route have caused the paralysis of maritime traffic and are already being felt in the increase in energy prices.
The company Abu Dhabi National Oil Co. indicated that it is “managing offshore production levels to meet storage needs,” according to a statement released by the Bloomberg agency. In the same vein, Kuwait Petroleum Corp. communicated a downward adjustment in production at its fields and refineries in the face of “Iranian threats against the safe passage of ships through the Strait of Hormuz.”
For now, Kuwait has cut this Saturday up to 100,000 barrels per day of crude, a volume that could triple this Sunday. The UAE, for its part, is trying to bypass the strait using alternative routes to maintain supply to global markets, such as the Adnoc pipeline, with a capacity to transport 1.5 million barrels per day to the city of Fujairah, in the Gulf of Oman, which allows it to avoid passing through Hormuz.
Companies like Kuwait Petroleum have activated the force majeure clause in their contracts, in order to be able to temporarily cease fulfilling their obligations to clients due to circumstances beyond their control. Unlike the UAE, Kuwait depends exclusively on the strait to export its oil abroad.
This scenario adds to the instability faced by other producers in the Persian Gulf. Saudi Arabia has stopped its largest refinery and redirected part of its shipments towards the Red Sea. Qatar, after suffering drone attacks on its territory, has been forced to halt the activity of the largest liquefied natural gas export plant on the planet.
The Brent barrel, a benchmark in Europe, reached $91.84 this Friday, its highest level since April 2024, with a rebound of slightly more than 7% compared to the previous day's close. Thus, the accumulated increase since the Friday before the attack by the United States and Israel against Iran is already around 26%, in the most bullish week since 2020.
The threats against the Strait of Hormuz and the offensives against several Persian Gulf countries continued this Saturday, despite Iranian President Masoud Pezeshkian assuring that neighboring states would not be attacked unless the attacks came from their territory.