Crude oil prices surged above $100 per barrel on Sunday, after major Middle East producers cut output because the critical Strait of Hormuz remains closed due to the Iran war.
West Texas Intermediate jumped 18.98%, or $17.25, to $108.15 per barrel by 6:12 p.m. ET. Global benchmark Brent advanced 16.19%, or $15.01, to $107.70. U.S. crude oil surged about 35% last week in its biggest gain in futures trading history dating back to 1983.
Kuwait, the fifth-biggest producer in OPEC, announced precautionary cuts Saturday to its oil production and refinery output due to “Iranian threats against safe passage of ships through the Strait of Hormuz.” The state-owned Kuwait Petroleum Corporation did not detail the size of the cuts.
Output in Iraq, the second-biggest OPEC producer, has effectively collapsed. Production from its three main southern oilfields has fallen 70% to 1.3 million barrels per day, three industry officials told Reuters Sunday. Those fields produced 4.3 million bpd before Iran war.
And the United Arab Emirates, the third-biggest producer in OPEC, said Saturday that it is “carefully managing offshore production levels to address storage requirements.” The Abu Dhabi National Oil Company (ADNOC) said its onshore operations are continuing normally.
Gulf Arab states are cutting production because they are running out of storage space, as oil barrels pile up with nowhere to go due to the closure of the Strait. Tankers are unwilling transit the narrow waterway because they are worried Iran will attack them. About 20% of the world’s oil consumption is exported through the Strait.
The war showed little signs of easing despite Trump’s claim it was “already won” with Iran naming Ayatollah Khamenei’s son, Mojtaba, as its new supreme leader, according to reports.
