After Iraq, Kuwait and UAE may be next to cut oil output on Iran crisis, analysts say

LONDON: Kuwait and the United Arab Emirates are the Gulf oil producers who will be next to reduce ​output if they cannot export crude through the Strait of Hormuz due ‌to the Iran crisis, as storage tanks fill up, according to analysts, traders and sources.

Shipping through the Strait of Hormuz, a narrow chokepoint between Iran and Oman through which a fifth of the ​world’s crude oil and liquefied natural gas passes, has ground to a ​near halt after Iranian hits on six vessels since the crisis ⁠started.

Earlier this week, Iraqi oil officials told Reuters Iraq has cut oil production ​by nearly 1.5 million barrels a day, and those cuts could widen to more ​than 3 million bpd within days as the country runs out of storage and cannot export crude due to the crisis.

Kuwaiti national oil company KPC did not immediately respond to requests for ​comment on whether shutdowns were imminent. UAE oil producer ADNOC had no comment beyond ​its listed subsidiaries' statements on Wednesday that said their operations were continuing normally.

Chokepoint

Analysts at JPMorgan said in ‌a ⁠report this week that Kuwait has about 18 days before output would need to be curtailed due to storage being used up, and the UAE 22 days if vessels are not re-routed, as estimated from the first day of the conflict.

Estimated number of days left until storage tanks in Gulf countries fill up, forcing oilfield shut-ins.

Estimated number of days left until storage tanks in Gulf countries fill up, forcing oilfield shut-ins.

Two oil ​traders who deal ​in UAE crude ⁠said Abu Dhabi may need to lower production earlier than this if exports through the Strait do not resume.

"At some point ​soon, everyone will also shut in if vessels do not come," ​said a ⁠source with a state oil company in the region.

Around 300 oil tankers remained inside the Strait as vessel traffic in and out of the chokepoint nearly halted following ⁠the outbreak ​of war, according to ship tracking data from ​Vortexa and Kpler that excludes some of the smallest tankers.