Kuwait Plans to Cut Oil Production Due to Storage Capacity Limits
Kuwait has begun reducing oil production at a number of fields as fuel storage facilities in the country fill up, The Wall Street Journal reports, citing informed sources.
According to the sources, the country, which is the fifth-largest oil producer in OPEC, is considering reducing oil production and refining to a level that covers only its domestic needs. Such a decision may be made in the coming days.
Analytical company Kpler believes that if Kuwait does not begin to reduce production, the country’s oil storage capacity will run out in about 12 days. The UAE and Saudi Arabia may face the same problem in the coming weeks.
WSJ notes that shutting down production leads to a drop in reservoir pressure at the field, while restarting drilling operations entails higher costs and may take several days or even weeks.
“Production will not resume on the same day that exports become possible again,” said Giovanni Staunovo of UBS.
The Persian Gulf countries have faced an inability to export fuel due to the military conflict in the region and the closure of the Strait of Hormuz.
