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(Bloomberg) — Oil production cuts in the Middle East are deepening as the crucial Strait of Hormuz waterway remains at a near-standstill, widening the chaos in energy markets.
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Four of the region’s giants — Saudi Arabia, Iraq, the United Arab Emirates and Kuwait — have lowered their collective output by as much as 6.7 million barrels a day, people with knowledge of the matter said, asking not to be identified discussing confidential information.
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The cutbacks, the most tangible supply response yet since the war began, means the quartet have cut their collective production by as much as a third. It also shaves about 6% off global supply.
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The conflict in the region, which is now in its second week and has sucked in more than a dozen countries, has forced output cuts as the effective closure of the main export route causes storage tanks to fill up.
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The shutdowns drove oil toward $120 a barrel on Monday, though prices tumbled back down again after US President Donald Trump suggested the war may end soon.
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Saudi Arabia has lowered output by 2 million to 2.5 million barrels a day, the United Arab Emirates by 500,000 to 800,000 barrels a day, Kuwait by about half a million a day and Iraq by about 2.9 million a day, the people said.
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Saudi Aramco Chief Executive Officer Amin Nasser declined to comment on output levels in an earnings call on Tuesday.
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Proportionately, Iraq has had the deepest cuts. Saudi Arabia’s, the UAE’s and Kuwait’s reductions all represent about 20% to 25% of their February output levels, according to data compiled by Bloomberg.
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—With assistance from Alex Longley.
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English (US)