Kuwait, a key member of the Organization of the Petroleum Exporting Countries (OPEC), has reportedly started scaling back production at some of its oil fields due to a lack of storage space for its crude.

Kuwait Scales Back Oil Production Amid Storage Crunch

The Wall Street Journal, citing sources, reported on Friday that the country is also contemplating further cuts to its production and refining capacity, which would only cater to domestic consumption.

Data provider Kpler has observed signs of Kuwait’s production cuts and predicts that the country will need to reduce output even more in the next 12 days to prevent storage from reaching capacity.

On Wednesday, QatarEnergy declared Force Majeure to its LNG buyers after halting all liquefied natural gas production.

Iraq has already reduced its oil production by over half, including a cut of 700,000 barrels per day from the Rumaila field alone.

Saudi Arabia and the UAE could face similar constraints within three weeks, Kpler said, as the Iran conflict disrupts shipping through the Strait of Hormuz — a vital chokepoint that normally carries about one-fifth of the world's daily oil supply. Tanker traffic through the strait has collapsed from roughly 60 ships per day to near zero.

This move is a last-resort measure, as shutting down an oil well can lead to long-term damage and high restart costs.

Global Oil Supply at Risk

The storage crisis in Kuwait is a direct result of the ongoing conflict in the Middle East.

Earlier, J.P. Morgan (NYSE:JPM) analysts warned that the blockade of Strait of Hormuz could reduce Iraq and Kuwait's combined output by 3.3 million barrels per day by the eighth day, with losses rising to 3.8 million bpd by day 15 and 4.7 million bpd by day 18.

As the conflict continues to escalate, with reports of oil tanker attacks and potential blockades, the stability of the global oil market remains uncertain. This could lead to further price hikes and supply disruptions.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.