Kuwait announced on March 7, 2026, that it has cut oil production and refining output due to tankers being unable to transit the Persian Gulf, citing threats from Iran and the closure of the Strait of Hormuz. The exact volume of the production cut was not disclosed, but Kuwait described the reduction as a precautionary measure that will be reviewed as the situation develops. Kuwait, the fifth-largest oil producer in OPEC, produced about 2.6 million barrels per day in January. The Kuwait Petroleum Corporation stated it is fully prepared to restore production levels once conditions allow [1].
The disruption has caused oil prices to surge approximately 35% this week, with tankers halting transit through the critical Strait of Hormuz due to fears of attacks by Iran. The Strait is the only entry and exit point for the Persian Gulf, and about 20% of global oil consumption is exported through it. Oil barrels are accumulating in the Middle East as tankers remain stationary, forcing Gulf Arab countries to lower production when storage capacity is reached. Iraq has already cut 1.5 million barrels per day as it runs out of storage space, according to Iraqi officials [1].
Natasha Kaneva, head of global commodities research at JPMorgan, noted that the market is transitioning from pricing geopolitical risk to dealing with tangible operational disruption. Kaneva further stated that Gulf Arab countries will exhaust storage capacity and shut down oil production if the U.S.-Iran war lasts more than three weeks, which could push Brent oil prices above $100 per barrel. JPMorgan estimates that production cuts could exceed 4 million barrels per day by the end of next week if the Strait remains closed [1].
Crude oil futures experienced historic gains, with Brent futures rising 8.52% ($7.28) to $92.69 per barrel and West Texas Intermediate futures spiking 12.21% ($9.89) to $90.90 per barrel. U.S. crude saw its largest weekly gain since 1983, jumping 35.63%, while Brent soared 28%, the biggest weekly increase since April 2020 [1]. The Iran war has also disrupted global natural gas supplies, as Qatar shut down liquefied natural gas production due to Iranian attacks. Qatar accounts for about 20% of global LNG exports, which are essential for electricity production and home heating [1].
CONCLUSION
The closure of the Strait of Hormuz and the Iran war have triggered significant disruptions in global energy markets, leading to historic surges in oil and natural gas prices. With production cuts mounting and storage capacity nearing exhaustion, analysts warn that prolonged conflict could drive prices even higher and force further shutdowns. The market impact is high, with immediate operational disruptions and the potential for further volatility if the situation persists.