(Bloomberg) – Kuwait is pumping oil at about 75% of the level seen before the Iran war as more tankers take the risk of navigating the Strait of Hormuz.
The country is producing about 2 MMbpd, compared with about 2.6 million before the conflict began at the end of February, Sheikh Nawaf Al-Sabah, chief executive officer of Kuwait Petroleum Corp., said in an interview. In the opening months of the conflict, Kuwait’s output fell below 1 MMbpd as Iran blocked shipping through the waterway.
While Tehran continues to threaten shipping in the strait, a growing number of tankers are risking transits anyway, he said.
“More ships are getting through because people recognize there’s no alternative to the Strait of Hormuz,” he said. “Everything you do, every pipeline you build, storage facility, all of that cannot replace the vital importance of the Strait of Hormuz to international commerce.”
His comments are the latest sign of rising oil exports from the Middle East, with some Wall Street banks estimatingshipmentsare approaching prewar levels. Gulf producers including Kuwait, the United Arab Emirates and Saudi Arabia have been sending cargoes out through Hormuz even though ships transiting the contested waterway continue to be attacked.
KPC is currently meeting its crude oil obligations to customers, Sheikh Nawaf said. However, the world is still facing a shortage of oil products, with strategic inventories at “critical levels,” he said.
“Why is Europe now under this emergency diesel and jet fuel release, it’s because of Kuwait,” said Sheikh Nawaf, referring to the recent announcement about a release of oil from strategic reserves. Prior to the war, the Gulf Arab state was a big supplier of these fuels to the region.
Kuwait’s refineries that produce these fuels are all working and functional, the problems is “lack of freedom of navigation through the strait,” he said.
Over the past month, more customers of Kuwait have said they are willing to bring in ships to collect cargoes, Sheikh Nawaf said. KPC is also working on expanding its own tanker fleet, which currently numbers 29 vessels.
“We found that having a strategic tanker fleet that we own is more beneficial to us,” he said.
Despite the disruption caused by the war, Kuwait’s strategic projects are on schedule, Sheikh Nawaf said. “We’re absolutely on track to increase our production capacity” to 4 MMbpd by 2035, from 3 million currently.
Kuwait is also moving forward with plans for pipelines, with routes through Saudi Arabia and UAE among options, he said.
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