In March, crude oil production among major Gulf Arab exporters experienced a significant decline due to the ongoing conflict involving Iran, as reported by OPEC. Iraq faced the most substantial drop, with production falling 61% from 4.2 million barrels per day (bpd) in February to 1.6 million bpd in March. Kuwait and the United Arab Emirates also saw considerable reductions, with decreases of 53% and 44%, respectively. Saudi Arabia, the largest producer in OPEC, reported a 23% decrease, dropping from 10.1 million bpd to 7.8 million bpd.
The declines in production are largely attributed to reduced export capabilities through the Strait of Hormuz, a crucial maritime route for oil shipments. Attacks on the East-West pipeline, which facilitates the transportation of crude oil from the Persian Gulf to the Red Sea, have further impeded exports. This pipeline, which has a capacity of 7 million bpd, recently suffered a capacity reduction of 700,000 bpd due to an assault by Iranian forces.
Overall, OPEC’s production fell 27%, from 28.7 million bpd to 20.8 million bpd. Industry experts, including Sheikh Nawaf al-Sabah, CEO of Kuwait Petroleum Corp, indicated that while immediate production increases could be achieved, it may take several months for Gulf Arab states to return to full capacity.
In contrast, Iranian production saw a smaller decline of roughly 5%, dropping from 3.24 million bpd to 3.06 million bpd. Despite the conflict, Iran has continued to export through the Strait of Hormuz. However, the U.S. Navy has announced plans to block maritime traffic in and out of Iranian ports, further complicating the situation. As a result, crude oil prices have risen, with U.S. futures surpassing $100 per barrel.