Kuwait’s Oil Sector Hit by Prolonged Strait of Hormuz Closure

Kuwait’s oil industry has been severely disrupted by the war between the United States and Iran, with the closure and disruption of the Strait of Hormuz sharply reducing the country’s ability to export crude and putting its economy under growing pressure. Kuwait depends heavily on oil revenue, with crude accounting for the vast majority of government income and export earnings. Unlike Saudi Arabia and the United Arab Emirates, Kuwait has no major pipeline route that allows it to bypass the Strait of Hormuz, leaving its oil exports particularly vulnerable to disruptions in the waterway. The impact has already appeared in official economic data. Kuwait’s economy contracted 4.6% year-on-year in the first quarter of 2026, while oil-sector GDP fell 12.5%, according to preliminary official estimates. The first-quarter figures cover only about one month of the conflict, meaning the full economic impact could be greater. Kuwait’s oil production fell sharply as exports were disrupted. According to data cited by Kuwait Times, production declined to about 1.2 million barrels per day in March from 2.58 million barrels per day in February. Production fell further during April and May as storage capacity filled and output had to be reduced. The disruption has affected more than oil shipments. Kuwait has reported attacks on vital infrastructure, including oil facilities and power and water installations, during the conflict. Kuwait’s state oil company also reported damage and injuries following an attack on an oil facility. Kuwait Petroleum Corporation declared a state of emergency shortly after the conflict began, according to the report provided. The measure was later lifted in June. Before the conflict, Kuwait was producing slightly more than 2.6 million barrels of crude per day and had plans to increase production capacity to 4 million barrels per day by 2040. The company’s chief executive, Sheikh Nawaf Saud Al-Sabah, said the industry could recover quickly once the Strait of Hormuz is fully reopened and shipping can resume normally. The disruption has also raised concerns about Kuwait’s wider economic outlook. A Reuters poll in July found that economists expected Kuwait’s economy to contract 8.1% in 2026, one of the sharpest projected declines among Gulf Cooperation Council economies. The same poll projected a strong rebound in 2027 if shipping and oil production normalize. The Strait of Hormuz remains critical to Kuwait because the country lacks the alternative export routes available to some of its Gulf neighbors. The World Bank has said disruptions in the waterway have halted Kuwait’s oil exports, increased import costs and placed additional pressure on government finances. The scale of the damage will depend largely on how quickly shipping through the Strait returns to normal. OPEC data and recent reporting indicate that Gulf producers have begun restoring some production as conditions improve, but disruptions to Hormuz continue to weigh on regional oil mar The post Kuwait’s Oil Sector Hit by Prolonged Strait of Hormuz Closure appeared first on Khaama Press.