Kuwait, following Qatar, is beginning to reduce oil production as storage facilities for unsold crude oil have nearly reached capacity and passage through the Strait of Hormuz remains blocked, intensifying pressures on Gulf energy markets. In recent days, the country has been gradually limiting production at certain oil fields, while seriously considering operating refineries solely to meet domestic consumption needs, with an official decision expected in the coming days. According to data company Kpler, initial cuts are already visible, and without larger reductions, storage tanks may reach full capacity in approximately 12 days.
The “siege” at the Strait of Hormuz has paralyzed shipping – Well closures are the last resort
Shutting down a well at an oil source represents the ultimate solution for any oil producer, as there is a risk of permanent damage to reservoir pressure and high restart costs. Production recovery cannot happen immediately and often requires days or even weeks, depending on the characteristics of each reservoir. At the same time, approximately one-fifth of global oil supply passes daily through the Strait of Hormuz, making any disruption in the region a significant risk factor for international markets.
The conflict with Iran and the peculiar “siege” at the Strait of Hormuz have paralyzed shipping, leaving dozens of vessels and hundreds of tankers trapped in the region. The major Gulf producers – Saudi Arabia, UAE, Kuwait, Qatar – are now racing against time. Their tanks are filling at a rate that threatens to reach full capacity within just a few weeks, with Saudi Arabia and the UAE expected to reach their limits in less than three weeks.
Brent crude prices have already skyrocketed
The massive storage tanks and export terminals in the Gulf function as critical “buffers” for the system. Raw crude is channeled there before being blended and loaded onto tankers with specific specifications for buyers worldwide. However, when maritime routes like the Strait of Hormuz become restricted or closed, producers can only continue pumping for a short time, channeling oil into these storage tanks. Once they fill up, there is essentially one option: production cuts, with consequences for public revenues, international obligations, and internal balances.
In the aftermath of the crisis, Brent crude prices have already soared to approximately $92 per barrel, from about $72 just one week ago. If more fields – not only in Kuwait but throughout the Middle East – are forced to halt operations, analysts don’t rule out another sharp rise, with Brent potentially exceeding even the $100 per barrel threshold. Iraq has already reduced its production by more than half, with significant cuts at fields like Rumaila, West Qurna 2, and Maysan, while production in the Kirkuk region has been preemptively suspended.
Saudi Arabia has greater storage capacity and the ability to bypass the Strait of Hormuz through a pipeline to the Red Sea, but this “pressure relief valve” has limits, according to the Wall Street Journal.
The massive loading facility at Ras Tanura has come under drone attacks, pushing Riyadh to divert more exports to the Yanbu port on the Red Sea, a network that can only partially offset disruptions in the Persian Gulf. In this fragile scenario, Kuwait finds itself trapped between full storage tanks, closed maritime routes, and an international environment thirsting for energy, escalating pressure for quick but not necessarily painless decisions.
