Oil Output Cut Across the Middle East

March 9 ------ The U.S.-Israeli war on Iran has disrupted oil and natural gas exports from the Middle East and forced production stoppages from Qatar to Iraq, with Kuwait announcing cuts over the weekend.

Analysts predict that the United Arab Emirates and Saudi Arabia will also have to cut output soon as they run out of oil storage. Below are the main energy disruptions so far:

PRODUCTION SHUTDOWNS

Iraqi output collapses: the country's oil production from its main southern oilfields has fallen by 70% to just 1.3 million barrels per day (bpd) from 4.3 million barrels per day (bpd) before the war, as exports via the Strait of Hormuz remain shut, three industry sources said on March 8.

On top of that, in Iraqi Kurdistan several companies have stopped output at their fields as a precaution. The region exported 200,000 bpd by pipeline to Turkey in February.

Kuwait force majeure: Kuwait Petroleum Corporation began cutting oil output and declared force majeure on March 7 due to the war shutting exports via the Strait of Hormuz.

United Arab Emirates output: Abu Dhabi National Oil Company (ADNOC) said on March 7 it was actively managing offshore output levels to preserve "operational flexibility".

Saudi disruptions: Saudi Arabia, the world's top oil exporter, suspended output at its 550,000-bpd Ras Tanura refinery and has begun rerouting crude loadings from eastern ports to Yanbu on the Red Sea. The refinery was struck again on March 4, without damage, the Saudi defense ministry said.

QatarEnergy LNG halted: Qatar stopped operations at its LNG facilities on March 2 and declared force majeure on March 4, affecting some of the world's largest plants and a source that supplies about 20% of global LNG.

Other outages: Israel also curtailed parts of its oil and gas production. Iran's Revolutionary Guards said on March 7 they had targeted an Israeli refinery after Iran's Tehran refinery was hit, state media reported. Air raid sirens sounded in the Haifa area, but there were no reports of damage.

SHIPPING

Strait of Hormuz: traffic through the Strait was largely closed after Iran attacked at least five ships, with a limited number of tankers transiting, choking off a key artery accounting for about 20% of global oil and LNG supply.

Iran declares the Strait closed: A senior Iranian Revolutionary Guards official said on March 2 that the Strait of Hormuz was closed and warned that Iran would fire on any ship attempting to pass.

The Guards said on March 7 they had hit a Marshall Islands-flagged tanker in the Strait, Iranian state media reported.

The United Kingdom Maritime Trade Operations (UKMTO) has reported several attacks against ships in the region since March 1, including a tanker off Kuwait and a container ship in the Strait of Hormuz.

War risk insurance cancelled: Major marine insurers are cancelling war-risk coverage for vessels operating in Iranian, Gulf and adjacent waters.

US offers assurances: Trump said the U.S. Navy could escort tankers through the Strait and directed the U.S. International Development Finance Corporation to provide political‑risk insurance and financial guarantees for Gulf shipping, though shipowners and analysts doubt this will be enough.

Interference: Windward reports that GPS and AIS interference has intensified, with 1,650+ vessels now affected across 30 jamming clusters stretching from Kuwait to Oman.

IMPACT ON CONSUMERS

China cuts refinery runs: Chinese refiners are shutting crude units or advancing planned maintenance due to disrupted crude flows. Other refineries in Asia are also cutting runs.

India vulnerable: with crude oil stock covering only about 25 days of demand, New Delhi scrambled for alternatives, ramping up Russian oil imports following the U.S. Treasury 30‑day waiver.

India also cut domestic gas supplies to industries, including fertilizer producers, and ordered its refineries to prioritize production of liquefied petroleum gas (LPG) used for cooking.

Indonesia shifts sourcing: Indonesia plans to increase U.S. crude imports to offset reduced Middle East supply.

Alternative supplies: Cargoes from Brazil, West Africa and the U.S. are possible but take over a month to reach Asia and are costlier amid soaring freight rates, traders said.

Source: marinelink.com