Hormuz Crisis, Oil Production in the Gulf Area Drops Nearly 7 Million Barrels/Day

JAKARTA - Oil production levels across the Persian Gulf region have plummeted to nearly 7 million barrels per day (bpd) due to the crisis in the Strait of Hormuz.

The Argus oil research institute said Saudi Arabia, the United Arab Emirates (UAE), and Bahrain had followed Iraq and Kuwait in limiting production because they could not continue exports due to the closure of the Strait of Hormuz.

Production restrictions must be carried out considering that the existing oil storage facilities are full in a short time.

Because of this, the Gulf countries reduced their oil production by 6.2 to 6.9 million bpd compared to the February production level, said Argus.

Saudi Aramco, the Saudi state-owned oil company, has suspended operations at the Safaniya, Marjan, Zuluf, and Abu Safa offshore oil fields, according to multiple sources. Argus estimates this resulted in production falling by around 2--2.5 million bpd.

According to another source, Iraqi oil production, which in February reached 4.42 million bpd, fell to 1.5-1.7 million bpd by March 8, and is expected to continue to fall to 1.2-1.3 million bpd.

The Kuwait oil company KPC on March 7 also announced a reduction in oil production and the level of use of its kilns. KPC announced a state of force majeure (force majeure) related to the delivery of its crude oil products, as announced by KPC, which was obtained by Reuters.

Kuwait's oil production is known to have plummeted from 2.59 million bpd in February to 2 million bpd today, and is expected to continue to fall to 1.5 million bpd due to declining refinery capacity, according to a source to Argus.

ADNOC, the UAE's national oil company, on March 7 announced it was operating as usual by utilizing other export options to overcome product delivery problems due to the crisis in the Strait of Hormuz.

However, Argus sources believe that UAE oil production has fallen to 2.7 to 3 million bpd compared to the production level in February which reached 3.53 million bpd.

Bahrain's oil company, Bapco, on March 9 also announced a force majeure on its refinery, according to a report by the national news agency BNA. Bahrain's refinery capacity is at 405,000 bpd.

On February 28, the US and Israel launched a joint attack on Iran, including Tehran, causing infrastructure damage and casualties.

Iran then carried out retaliatory attacks against Israeli territory and US military bases throughout the Middle East.

The escalation in Iran has triggered a "de facto" blockade of the Strait of Hormuz, an important shipping route for the delivery of oil and LPG gas from Persian Gulf countries to world markets.

The disruption of shipping also has an impact on the export and production levels of oil in the Gulf region.