Kuwait and UAE May Follow Iraq in Cutting Oil Output Due to Strait of Hormuz Crisis

Analysts warn that Kuwait and the United Arab Emirates could be the next major oil producers forced to slash output if the crisis in the Strait of Hormuz continues, following Iraq's recent production cuts.

The critical shipping lane, which handles about one-fifth of global seaborne crude oil and liquefied natural gas shipments, has seen traffic grind to a near-standstill. This paralysis follows a series of attacks by Iran on at least six vessels since the crisis began.

Iraq was forced to cut its oil production by nearly 1.5 million barrels per day earlier this week. Analysts project this reduction could deepen to over 3 million barrels per day within days, as the country lacks sufficient storage capacity for unsold crude.

A recent JPMorgan report highlights the looming storage crunch for other Gulf producers. According to their analysis, Kuwait has only about 18 days of storage capacity remaining for its produced oil, while the UAE has roughly 22 days. Once these storage limits are reached, both nations would have no choice but to follow Iraq's lead and curtail production.

Shipping data from Vortexa and Kpler indicates the scale of the disruption, with approximately 300 oil tankers currently stranded and unable to transit the strait.

While the Strait of Hormuz remains officially open, practical passage has become prohibitively expensive. Insurance companies have dramatically increased premiums for vessels entering the zone since the conflict escalated, with some refusing coverage altogether. This has rendered transit economically unviable for most commercial carriers.

In a recent interview with NBC News, Iranian Foreign Minister Abbas Araghchi stated that Tehran has "no intention of closing the Strait of Hormuz now." However, he added that "it is war" and Iran is considering all possible scenarios.