Kuwait has declared crude oil production cuts and the United Arab Emirates has effectively begun reducing output as Iran's blockade of the Strait of Hormuz continues to choke exports from major Middle Eastern oil producers following U.S.-Israeli attacks on Iran.
With global crude supply disrupted, oil prices are poised to breach $100 per barrel and could surge to $150 in a worst-case scenario, analysts say.
Kuwait Petroleum Corporation, the state-owned oil company, issued a statement Monday citing "preventive measures" for the cuts. "Considering Iran's continued attacks and threats to shipping through the Strait of Hormuz, we are reducing crude oil and refining throughput," KPC said.
Kuwait invoked a force majeure clause—a contractual provision that exempts parties from obligations during events such as war or natural disasters—as justification for the production cuts.
Located at the innermost point of the Persian Gulf, Kuwait must ship all its crude and petroleum products through the Strait of Hormuz, putting it at a greater disadvantage than other Gulf states such as Saudi Arabia and the UAE, which have overland export pipelines.
Abu Dhabi National Oil Company also signaled it had begun curtailing output, stating it was "actively managing production at offshore fields to meet storage demand" and would resume normal operations without prolonged delays.
"Kuwait and the UAE have become prime targets for Iranian missiles and drones," Bloomberg reported.
Other producers have also suffered disruptions. The Sarsang oil field in Iraq's northern Kurdistan region, operated by U.S.-based HKN Energy, halted production of approximately 30,000 barrels per day following an Iranian drone strike. Saudi Aramco temporarily suspended operations at its Ras Tanura complex, home to its largest refinery, after the facility was hit. Qatar invoked force majeure after an attack on its largest liquefied natural gas production facility.
As Gulf states around the Strait of Hormuz reduce output one by one amid signs of a prolonged conflict, oil prices appear set to break through $100 per barrel.
West Texas Intermediate crude futures surged 36% last week alone to reach $90.90 per barrel—the largest weekly gain since the market's inception in 1983. Brent crude futures rose 28% to $92.69.
Saad al-Kaabi, Qatar's energy minister, warned in an interview with the Financial Times on Sunday that if the Hormuz blockade persists, "oil prices will soar to $150 per barrel and natural gas prices to around $138 per megawatt-hour within two to three weeks, dealing a blow to the global economy."