Iran Closes Strait of Hormuz: Arab Nations' Oil Production Plummets by 7 Million Barrels Daily

Oil production across the Persian Gulf region has plummeted by almost 7 million barrels per day (bpd) due to the crisis at the Strait of Hormuz, according to the petroleum research agency Argus. Argus reported that Saudi Arabia, the United Arab Emirates (UAE), and Bahrain have followed the lead of Iraq and Kuwait in restricting production as they are unable to continue exports due to the closure of the Strait of Hormuz.

Production cuts have become necessary as existing oil storage facilities fill to capacity within a short timeframe. As a result, Gulf states have reduced their oil output by 6.2 to 6.9 million bpd compared to February production levels, according to Argus.

Saudi Aramco, Saudi Arabia’s state-owned oil company, has suspended operations at the offshore oil fields of Safaniya, Marjan, Zuluf, and Abu Safa, according to multiple sources. Argus estimates this has resulted in a production decline of approximately 2–2.5 million bpd.

According to other sources, Iraqi oil production, which stood at 4.42 million bpd in February, fell to 1.5–1.7 million bpd by 8 March and is expected to continue declining to 1.2–1.3 million bpd.

Kuwait Petroleum Corporation (KPC) announced on 7 March a reduction in oil production and refinery utilisation rates. KPC declared force majeure regarding crude oil product shipments, according to announcements received by Reuters.

Kuwait’s oil production has declined from 2.59 million bpd in February to 2 million bpd currently, and is expected to fall further to 1.5 million bpd due to reduced refinery capacity, according to sources cited by Argus.