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In a move that underscores the growing shockwaves across global energy markets, Kuwait cuts oil production after tanker traffic through the Persian Gulf stalled amid mounting threats from Iran.

Officials in the Gulf monarchy confirmed Saturday that both crude production and refining operations have been scaled back as oil tankers remain unable to navigate the region safely. The decision, authorities said, is a precaution as geopolitical tensions rattle one of the world’s most vital energy corridors.

Kuwait did not disclose the exact number of barrels removed from production but emphasized the cuts are temporary and will be reevaluated as the security situation unfolds.

The country ranks as the fifth-largest producer in the Organization of the Petroleum Exporting Countries (OPEC) and pumped roughly 2.6 million barrels per day in January, making even small disruptions significant for global supply.

Tanker Standstill Chokes Oil Exports

Strait of Hormuz Becomes Energy Bottleneck

The crisis centers on the Strait of Hormuz, a narrow maritime gateway connecting the Persian Gulf to international waters.

Roughly 20% of the world’s oil consumption passes through this chokepoint. For Gulf exporters like Kuwait, it is essentially the only doorway to global markets.

But that doorway has effectively slammed shut.

Ship owners are refusing to send tankers through the strait after escalating threats that Iranian forces could target vessels. Without ships to carry crude, oil barrels are accumulating across the region like water backing up behind a dam.

As storage tanks fill, producers are left with little choice but to slow the taps.

“Kuwait Petroleum Corporation remains fully prepared to restore production levels once conditions allow,” the state-owned company said in a statement.

Regional Production Cuts Begin to Spread

Kuwait is not alone in throttling output.

Officials in Iraq told Reuters earlier this week that Baghdad has already reduced production by 1.5 million barrels per day as storage facilities approach capacity.

Across the Gulf, oil fields that once roared like engines of global commerce are beginning to idle.

If tankers remain absent, the region could face a chain reaction: full storage tanks forcing more countries to shut down production lines.

Oil Markets React With Historic Price Surge

Futures Markets Experience Record Weekly Gains

Financial markets have responded with dramatic swings.

Crude prices have soared as traders scramble to price in the disruption.

On Friday, Brent crude futures jumped 8.52%, rising $7.28 to settle at $92.69 per barrel.
Meanwhile, West Texas Intermediate crude surged 12.21%, climbing $9.89 to close at $90.90 per barrel.

The weekly picture looks even more dramatic.

U.S. crude skyrocketed 35.63% this week, marking the largest weekly gain since the futures contract began trading in 1983. Brent crude climbed 28%, its biggest weekly jump since April 2020.

The surge reflects not just fear but real operational disruption.

“The market is shifting from pricing pure geopolitical risk to grappling with tangible operational disruption,” said Natasha Kaneva, head of global commodities research at JPMorgan, in a note to clients.

Risk of $100 Oil Looms

Analysts warn the situation could deteriorate quickly.

Kaneva said Gulf producers could exhaust available storage space and shut down additional production if the U.S.-Iran conflict stretches beyond three weeks.

Such a scenario would likely push Brent crude above $100 per barrel, she warned.

JPMorgan estimates that total output reductions across the region could surpass 4 million barrels per day by the end of next week if the Strait of Hormuz remains effectively closed.

Natural Gas Markets Also Feeling the Shock

Oil is not the only energy supply under pressure.

The conflict has also disrupted the global liquefied natural gas (LNG) market.

Qatar, one of the world’s largest LNG exporters, halted production Monday after attacks attributed to Iran.

That shutdown carries major consequences: roughly 20% of the world’s LNG exports originate from Qatar.

LNG is natural gas chilled into liquid form so it can be loaded onto tankers and shipped across oceans. It fuels power plants and heats homes in countries around the world.

With LNG shipments halted and oil exports disrupted, the global energy system now faces a tightening squeeze — like a pipeline slowly constricting under pressure.

Global Energy System Faces Growing Uncertainty

As tankers remain stalled and geopolitical tensions simmer, energy markets are entering a period of profound uncertainty.

For now, Kuwait cuts oil production as a defensive move in a rapidly shifting crisis — one that could reshape global supply chains if the Persian Gulf remains locked down.