Kuwait and UAE Cut Oil Output as Strait of Hormuz Tensions Escalate

Kuwait and the United Arab Emirates (UAE) have begun reducing oil production amid escalating tensions in the Middle East and threats to shipping through the Strait of Hormuz. The cuts approach as the Iran conflict disrupts global energy supplies and drives up oil prices.

Strait of Hormuz Disruption

The near-closure of the Strait of Hormuz, a critical waterway linking the Persian Gulf to the open seas, is the primary driver of these production cuts. Iranian threats to shipping have prompted ship owners to avoid the strait, leading to a buildup of oil in the Middle East with limited export routes. Approximately 20% of global oil consumption is exported through the Strait of Hormuz, making it a vital chokepoint for global energy markets. CNBC reports that tankers have largely stopped transiting the strait due to fears of attack.

Kuwait’s Production Cuts

Kuwait initiated oil production cuts on Saturday, March 7, 2026, as a precautionary measure. While the exact volume of the initial cut was not disclosed, it began with approximately 100,000 barrels per day and was expected to nearly triple on Sunday. Further reductions are anticipated based on storage levels and the evolving situation in the Strait of Hormuz. Yahoo Finance notes that Kuwait produced around 2.6 million barrels per day in January, making it the fifth-largest oil producer in OPEC.

UAE’s Response

The UAE has also started reducing oil production, with Abu Dhabi National Oil Co. (ADNOC) managing offshore production levels to address storage requirements. Specific details regarding the UAE’s production cuts were not immediately available. Yahoo Finance reports that the UAE pumped more than 3 million barrels per day.

Impact on Oil Prices

The disruptions in oil supply have already had a significant impact on global oil prices. Prices surged approximately 35% this week, reaching almost $93 a barrel in London, the highest close in over two years. CNBC highlights that this price increase is prompting consumers to seek alternative energy sources and raises concerns about potential inflationary pressures.

Iraq’s Production Challenges

Kuwait is not the only Gulf nation facing production challenges. Iraq has already cut oil production by 1.5 million barrels per day due to limited storage capacity, as reported by Iraqi officials to Reuters on Tuesday. CNBC

Looking Ahead

Kuwait Petroleum Corporation has stated its readiness to restore production levels once conditions improve. However, the duration of the production cuts and the extent of the impact on global oil markets will depend on the resolution of the conflict and the reopening of the Strait of Hormuz to safe passage. The situation remains fluid and requires close monitoring.