Gulf oil giants deepen output cuts as ships avoid Hormuz
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The conflict in the Middle East has forced output cuts as the effective closure of the main export route causes storage tanks to fill up.
PHOTO: REUTERS
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DUBAI - Oil production cuts in the Middle East are deepening as the crucial Strait of Hormuz waterway remains at a near-standstill
Four of the region’s giants – Saudi Arabia, Iraq, the United Arab Emirates and Kuwait – have lowered their collective output by as much as 6.7 million barrels a day, people with knowledge of the matter said, asking not to be identified discussing confidential information.
The cutbacks, the most tangible supply response yet since the war began, means the quartet have cut their collective production by as much as a third. It also shaves about 6 per cent off global supply.
The conflict in the region, which is now in its second week and has sucked in more than a dozen countries, has forced output cuts as the effective closure of the main export route causes storage tanks to fill up.
The shutdowns drove oil toward US$120
Saudi Arabia has lowered output by 2 million to 2.5 million barrels a day, the United Arab Emirates by 500,000 to 800,000 barrels a day, Kuwait by about half a million a day and Iraq by about 2.9 million a day, the people said.
Saudi Aramco Chief Executive Officer Amin Nasser declined to comment on output levels in an earnings call on March 10.
Proportionately, Iraq has had the deepest cuts. Saudi Arabia’s, the UAE’s and Kuwait’s reductions all represent about 20 per cent to 25 per cent of their February output levels, according to data compiled by Bloomberg. BLOOMBERG
