Gulf oil crisis escalates as Kuwait began cutting crude production after storage tanks approached capacity. Officials say very large crude carriers cannot transport oil through the Strait of Hormuz, creating an urgent supply bottleneck.
Kuwait now considers deeper cuts, potentially limiting output to domestic demand alone. Analysts expect a decision within days. Brent crude futures surged to $91 per barrel following reports of reduced production.
The Gulf oil crisis also affects Iraq, which halved oil production earlier this week. Qatar shut several gas liquefaction plants, further tightening energy supplies. Experts warn these steps could trigger a broader energy shock worldwide.
UBS analyst Giovanni Staunovo said limited storage leaves no choice but to curb production. He explained that prolonged Strait of Hormuz closures would remove barrels from the market and push prices higher. Restarting idle wells takes weeks and may damage reservoir pressure, making production cuts a costly measure.
Qatar’s energy minister, Saad al-Kaabi, warned all Gulf exporters may have to declare force majeure if the conflict continues. He stressed that failure to act could create legal liabilities for exporters. Qatar, the world’s second-largest LNG producer, already declared force majeure after drone strikes hit its Ras Laffan plant.
Al-Kaabi added that the ongoing conflict could disrupt global GDP growth. He noted that energy shortages could affect production chains and create cascading effects across industries worldwide. Economists estimate that even a few weeks of continued disruption may trigger major supply challenges.
Energy economist Anas Alhajji explained that a four-week disruption could overwhelm the market. He highlighted concerns that China may restrict exports, leaving oil stranded domestically, and preventing global redistribution.
Analysts question whether the conflict centers on Iran’s nuclear program or a broader strategic objective. They warn that uncertainty increases risks for global markets and complicates recovery timelines. Even if the war ends quickly, restarting wells, refineries, and export hubs could take months.
The Gulf oil crisis is already sending diesel and LNG prices higher. Futures show a 21 percent jump, marking the largest weekly gain since early May 2020. Goldman analysts warned crude could surpass $100 per barrel if the conflict persists.
Global investors monitor the Gulf oil crisis closely. Supply disruptions, rising energy prices, and logistical challenges indicate that markets may face prolonged volatility and economic shocks.
