An Aramco oil tank is seen at the Production facility at Saudi Aramco’s Shaybah oilfield in the Empty Quarter, Saudi Arabia.
Ahmed Jadallah | Reuters
Crude oil production in the major Gulf Arab exporters plunged in March due to the Iran war, according to data released by OPEC on Monday.
Iraq took the biggest hit with production collapsing 61% from 4.2 million barrels per day in February to 1.6 million bpd in March, according to OPEC’s monthly report. Output plunged 53% in Kuwait and 44% in the United Arab Emirates month over month, the data showed.
Production in Saudi Arabia, OPEC’s biggest producer, dropped 23% from 10.1 million bpd to 7.8 million bpd. The Saudis are relying on a crucial East-West pipeline to re-route barrels from the Persian Gulf to the Red Sea for export.
But the pipeline, which has a capacity of 7 million bpd, recently came under attack by Iran. The attack cut the pipeline’s capacity by 700,000 bpd, according to the state-owned Saudi Press Agency.
Overall, OPEC’s production plunged 27% month over month from 28.7 million bpd to 20.8 million bpd.
The Gulf Arab states have cut production because they are unable to export through the Strait of Hormuz due to the war. Tanker traffic through the narrow sea route, which connects the Gulf to global energy markets, has plunged due to attacks by Iran.
It will take months for the Gulf Arab states to bring production back up to full capacity, said Sheikh Nawaf al-Sabah, the CEO of Kuwait Petroleum Corp.
“We have resilient reservoirs that bring out quite a bit of production immediately — within a few days,” the CEO said at the CERAWeek by S&P Global conference on March 24. “The bulk of it will come within a few weeks, and then the full production will come within three or four months.”
Iran’s production, meanwhile, dropped around 5% from 3.24 million bpd to 3.06 million bpd month over month, according to OPEC. The Islamic Republic has continued to export through the strait during the war.
But Iran is now facing a blockade after peace talks with the U.S. failed to produce an agreement over the weekend. President Donald Trump has ordered the U.S. Navy to block all maritime traffic in and out of Iran’s ports starting at 10 a.m. ET Monday.
U.S. crude oil futures for May delivery have jumped back above $100 per barrel, with the U.S. contract for June delivery at $94 per barrel. The global benchmark, Brent crude, was also trading around $100 per barrel, for June delivery, while the July contract was at $93.93 per barrel.
