Kuwait crude output drops to 1.77 million bpd in September

Summary

• Kuwait's crude production fell about 200,000 bpd in September to average 1.77 million bpd.
• Output stood near 2.5 million bpd in February, before US and Israeli strikes on Iran.
• Gulf attacks and scarce tankers are squeezing exports unevenly across OPEC producers.

The latest

Kuwaiti crude production averaged 1.77 million barrels per day in September, down roughly 200,000 bpd from August, a person with knowledge of the matter told Reuters on Friday. The person attributed the decline to rising attacks in the Gulf and tight tanker availability weighing on exports. The drop landed even as Gulf oil shipments showed broader signs of recovery.

Details

• The figure: September output averaged 1.77 million bpd, about 200,000 bpd below the previous month, according to the person with knowledge of the matter, who spoke to Reuters on Friday on condition of anonymity because they were not authorised to discuss the matter publicly.
• The baseline: Kuwait produced about 2.5 million bpd in February, before the war began. That puts current output roughly 730,000 bpd below the pre-war level, a decline of close to 30% for the OPEC member in the space of several months.
• The trigger: The conflict started after the United States and Israel launched attacks on Iran on February 28, according to Reuters. The disruption that followed hit oil shipments across the Gulf, and producers have since been adapting output and export patterns to wartime conditions.
• Exports collapse: Preliminary Kpler data showed Kuwaiti crude and condensate exports averaging about 740,000 bpd in September, down from 1.2 million bpd in August. That is a fall of roughly 460,000 bpd month on month, outpacing the decline recorded in production itself.
• Why flows are stuck: Tight tanker availability, higher shipping risks and continued Iranian attacks in the Gulf are constraining flows from some countries, Reuters reported. The combination limits how much crude can physically move, independent of how much producers are able to pump.
• Uneven recovery: Exports from some producers, including Saudi Arabia, have rebounded as Gulf countries adjust to wartime conditions, according to Reuters. The rebound has not been uniform, leaving some OPEC members shipping far below pre-war volumes while others recover faster.
• Going dark: Gulf oil producers have shipped crude through the Strait of Hormuz in recent months on tankers with their Automatic Identification System signals switched off, Reuters reported, a practice intended to avoid detection and potential attacks on vessels.
• No official comment: A spokesperson for state oil company Kuwait Petroleum Corporation did not immediately respond to a Reuters request for comment. Kuwaiti authorities have not published their own figure for September production or exports alongside the account given by the person with knowledge of the matter.

Background

Kuwait is an OPEC member whose crude reaches buyers almost entirely by sea through the Strait of Hormuz. Output near 2.5 million bpd in February was the reference point before the US and Israeli strikes on Iran on February 28 upended shipping in the Gulf.

Between the lines

Exports fell further than production did, which points to a logistics bottleneck rather than a wellhead problem: barrels can be pumped faster than tankers can be secured to lift them. The resort to switching off AIS signals underlines how far shipping risk, not reservoir capacity, now sets the ceiling on Kuwaiti volumes.

What's next

Watch October Kpler export data for whether the 740,000 bpd level holds or recovers, any Kuwait Petroleum Corporation statement on production, and whether tanker availability and attacks in the Gulf ease.

Source: Reuters via ZAWYA, Kpler