Four major Gulf oil producers have reduced their crude output by a combined 6.7 million barrels per day, a move that removes about 6% of global supply from the market as the Strait of Hormuz remains effectively closed to tanker traffic.
Saudi Arabia, Iraq, the United Arab Emirates, and Kuwait implemented the cuts as the ongoing conflict in the region entered its second week, according to people familiar with the matter who spoke on condition of anonymity. The reduction represents about one-third of the quartet's combined production capacity.
The production cuts come as storage facilities across the region reach capacity, with no ships available to transport crude through the Strait of Hormuz. The waterway between Iran and Oman handles about 20% of global oil consumption and a significant share of liquefied natural gas trade.
Saudi Arabia has lowered its output by 2 million to 2.5 million barrels per day. The UAE reduced production by 500,000 to 800,000 barrels daily. Kuwait cut about half a million barrels per day. Iraq has seen the deepest proportional reduction, with output dropping by approximately 2.9 million barrels per day.
Iraq's production from three major southern oilfields has fallen by about 70% to 1.3 million barrels per day, down from 4.3 million before the conflict began.
Kuwait Petroleum Corporation declared force majeure on Saturday and implemented precautionary production cuts, citing Iranian threats against ship passage through the Strait of Hormuz. The state-run producer said it would review the situation as conditions develop.
The UAE's Abu Dhabi National Oil Company said it is carefully managing offshore production levels due to storage requirements, though onshore operations continue normally.
Oil prices reacted sharply to the supply disruption. Brent crude rose above $111 a barrel in early trading on Monday before settling near $108. West Texas Intermediate traded above $106. Both benchmarks posted gains of more than 16% above their previous closes. Prices later pulled back after US President Donald Trump suggested the war might end soon.
The supply impact extends beyond crude production. Qatar's Energy Minister warned that continuation of the war could force further production stops and push oil prices to $150 a barrel.
US Energy Secretary Chris Wright told CNN that a return to normal shipping traffic through the Strait of Hormuz could take weeks. "We're nowhere near normal traffic right now," Wright said. "That will take some time. But again, worst case that's a few weeks, that's not months."
For Saudi Arabia, the UAE, and Kuwait, the reductions represent about 20% to 25% of their February output levels, according to data compiled by Bloomberg.
The production cuts mark the most significant supply response since the conflict began. Saudi Aramco Chief Executive Officer Amin Nasser declined to comment on output levels during an earnings call on Tuesday.
The Strait of Hormuz disruption has moved to the center of market attention as the conflict widens risks to Gulf ports, terminals, and shipping lanes.