KPC Forced to Slash Crude Output
As exports ceased due to the US military blockade of the Strait of Hormuz, Kuwait’s storage facilities reached maximum capacity within weeks. Kuwait Petroleum Corporation (KPC) was forced to drastically cut crude output, adding to previously instated oil and gas curbs from Iraq and Qatar, as the war against Iran has blocked shipments from the Middle East. Iran faced similar technical pressures, cutting its own production as the storage tanks hit the “red zone” due to the US Navy blockade of Hormuz, the world’s most important oil artery that accounts for 20 per cent of global oil and LNG supply.
According to the Baker Institute, the “Losing Hormuz” risked bankruptcy for the smaller Gulf states, triggering a permanent shift in global energy logistics. In a letter sent by KPC to its consumers, the oil giant said that it is unable to resume oil shipments. The producer had already declared force majeure at the beginning of March, soon after the US and Israel began their joint aerial assault on Iran, suspending the contractual shipments to buyers. This came as the US President Donald Trump declared that the naval blockade of Iran’s seaborne trade would remain in force until Iran’s new regime agrees to stop enrichment of uranium, effective immediately, a condition Trump set for breaking the impasse in talks brokered by Islamabad.
Unlike Saudi Arabia or the UAE, Kuwait lacks significant pipeline infrastructure to transport oil to the Red Sea or the Gulf of Oman, which has made the Gulf nation the primary victim of the Hormuz maritime shutdown.
An estimated 20 million bpd of oil and 21 million bpd of condensate, equivalent to about one-fifth of global consumption, were shipped through the Strait of Hormuz before the conflict in the Middle East began.
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