Kuwait Declares Force Majeure And Cuts Oil Output As Shipping Crisis Disrupts Global Oil Flows

Kuwait has begun reducing crude oil production and declared force majeure after escalating conflict in the Middle East disrupted shipping through the Strait of Hormuz, one of the world’s most critical energy corridors.

Kuwait Petroleum Corporation (KPC) started cutting output on March 7 as the US-Iran war blocked tanker movements in the region for the eighth consecutive day.

The corporation said it had reduced crude oil production and refining throughput as a precaution because of the worsening security situation in the region.

The national oil company declared force majeure after implementing the cuts.

The company did not disclose how much production had been reduced. In February, Kuwait produced around 2.6 million barrels per day of crude oil, making it one of the significant oil producers in the Gulf region.

Officials said the reduction is precautionary and will be reviewed as the situation develops. KPC also said production could return to normal once shipping conditions and regional security improve.

The disruption comes as hostilities have effectively blocked traffic through the Strait of Hormuz, the narrow waterway between Iran and Oman that handles about 20 percent of the world’s oil and liquefied natural gas supply.

The strait is considered the most important oil transit chokepoint in global shipping. Millions of barrels of crude oil and petroleum products normally pass through the route each day on board tankers heading to markets in Asia, Europe and other regions.

With tanker movements limited, Gulf producers are struggling to export crude oil and refined products. Analysts say storage facilities in major exporting countries could soon reach capacity if shipments continue to remain disrupted.

KPC said the force majeure declaration was triggered by explicit threats from Iran against the safe passage of ships through the Strait of Hormuz. The notice also referred to continued attacks targeting Kuwait and a severe shortage of vessels willing to load cargo in the Arabian Gulf.

According to the notice, there is an “almost total absence” of ships available to transport crude oil and petroleum products from Gulf terminals.

Shipping companies and tanker operators have become increasingly cautious about entering the region because of security risks and rising insurance costs.

Kuwait is a major supplier of naphtha to Asian markets and a key exporter of jet fuel to north-west Europe. Naphtha is widely used as a feedstock for petrochemical production, meaning prolonged export disruptions could affect industrial supply chains.

Energy traders are closely watching the situation, as supply interruptions from Kuwait could add further pressure to global fuel markets already affected by reduced output from other Gulf producers.

The disruption is linked to the ongoing US-Israeli war involving Iran, which has spread beyond Iranian territory. Iran has launched strikes against Israel and Gulf Arab states hosting US military bases. Israel has also carried out fresh attacks in Lebanon after the Iran-aligned Hezbollah militia fired across the border.

The growing conflict has increased security risks for shipping across the Arabian Gulf, particularly for oil tankers operating near the Strait of Hormuz.

Analysts warn that if the crisis continues, other major Gulf producers such as Saudi Arabia and the United Arab Emirates could also be forced to cut oil production if storage facilities fill up due to export disruptions.

References: Reuters, Tbs news