The biggest bottleneck to the global trade of energy is no longer crude oil, according to the head of Kuwait's state oil company. "There is enough crude to satisfy crude demand," said Sheikh Nawaf Saud Al-Sabah, CEO of the Kuwait Petroleum Corporation, at the Dow Jones Energy Forum in New York on Wednesday.
The problem for Kuwait is getting the products that are made from oil, such as diesel, out of the country. While the Middle East has pipelines to move crude around the Strait of Hormuz, it doesn't have the same infrastructure for fuels, according to Al-Sabah.
There are also aren't enough tankers that specialize in transporting fuel to move it out of the Persian Gulf at a time when those tankers are being attacked regularly by Iranian forces, Al-Sabah said.
"Last night, ships were hit. The previous night, ships were hit," he said.
The pipelines and shipments through the Strait of Hormuz have restored oil flows from the Middle East back to prewar levels -- and even above prewar levels on some days. Brent crude, the international benchmark, has lately been trading around $108 a barrel. But a global diesel shortage has forced prices to record highs, hurting the truckers and farmers who depend most on the fuel. It's lifted the stocks of U.S. refiners, such as Valero Energy and Marathon Petroleum, who are insulated from the wars and have been able to make record margins.
Before the war, Kuwait exported about 2.7 million barrels of oil per day, with about 1.3 million of those barrels in the form of crude. The country is back to exporting more than 1.1 million barrels per day of crude, but fuel exports remain well below prior levels. Al-Sabah estimated that Kuwait is back to about 75% of its prewar production. Getting products out of the Strait is the key factor that could get it back to full strength.
Al-Sabah called on other countries to help get the fuel out, including by sending their own ships through the Strait of Hormuz. So far, Kuwait has been using its own ships, putting its crews at risk.
"We're asking our partners around the world to also step up," he said. "We just are asking everybody else to bear some portion of that risk. It cannot be a producer risk that is borne completely."
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