Kuwait has slashed crude oil production by 120,000 barrels per day and suspended refining operations at its Mina al-Ahmadi facility due to the ongoing blockade of the Strait of Hormuz. The move intensifies global crude supply constraints, pushing Brent crude futures above $98 per barrel and elevating volatility in energy markets.
- Kuwait cut oil production by 120,000 barrels per day due to Hormuz Strait closure
- Mina al-Ahmadi refinery suspended operations, affecting 350,000 bpd of refining capacity
- Brent crude (BZ=F) rose to $98.40 per barrel, a 7% increase in one week
- VIX index (^VIX) climbed to 28.3, reflecting heightened market volatility
- GCC nations are discussing emergency supply coordination to mitigate impact
- Prolonged blockage could reduce global crude inventories by over 40 million barrels by mid-2026
Kuwait has initiated emergency production cuts, reducing its crude oil output by 120,000 barrels per day—approximately 15% of its total daily capacity—as the Strait of Hormuz remains closed to commercial shipping. The closure, linked to regional military tensions, has disrupted the flow of oil from the Persian Gulf to global markets. The country’s Mina al-Ahmadi refinery, which processes about 350,000 barrels per day, has also been idled indefinitely, compounding downstream supply risks in the Middle East and North Africa region. The disruption coincides with a surge in global energy market volatility. Brent crude futures (BZ=F) rose to $98.40 per barrel, marking a 7% increase over the past week, while West Texas Intermediate (CL=F) climbed to $91.60. The VIX index (^VIX) spiked to 28.3, signaling heightened investor anxiety over supply shocks and potential escalation in the region. These price movements reflect growing concerns about a broader supply crunch, particularly as alternative shipping routes remain underutilized and costly. The situation has prompted emergency coordination among Gulf Cooperation Council (GCC) members, with Saudi Arabia and the UAE considering temporary increases in output to offset the shortfall. However, geopolitical uncertainty remains high, as the blockage persists without a clear resolution timeline. The prolonged closure threatens to impact global refining margins and could delay fuel deliveries to Asia and Europe, particularly in the second quarter. Energy analysts warn that if the Hormuz Strait remains inaccessible for more than 30 days, global crude inventories could decline by over 40 million barrels by mid-2026, further tightening the market. The event underscores the fragility of critical maritime chokepoints and their outsized influence on energy pricing and trade flows.