Kuwait suspends oil contracts again as Strait remains blocked

Kuwait has extended a force majeure declaration that now covers about 2 million barrels a day of crude and refined products as the Strait of Hormuz shutdown blocks tanker traffic.

The move lets state-owned Kuwait Petroleum Corp. suspend delivery obligations it can’t meet under current conditions. This isn’t new – KPC had already declared force majeure earlier in the conflict – but the latest notice expands it across the country’s export system as disruptions drag on, Bloomberg reports.

The bottom line is that Kuwait can’t load or ship oil, cutting off flows worth roughly $150 million to $180 million a day at current prices and throwing delivery schedules into disarray.

While other Gulf producers are also dealing with export disruptions, Kuwait is especially vulnerable because almost all of its oil has to pass through Hormuz, with few alternative routes.

Kuwait has suffered repeated hits to its oil infrastructure, and output is now at levels last seen in the early 1990s after the Iraqi invasion. The latest notice to customers, which was delivered late last week, takes into account that full operations will take time to recover once hostilities ease, according to Bloomberg.

Libya’s oil company halts production as crisis gets worse

As the political crisis in Libya deepens, the country’s National Oil Co. halted production at its petroleum fields and cut off shipments from its ports, rattling regional oil markets.

The NOC declared a “force majeure” to inform customers that orders could not be fulfilled because of unforeseen circumstances.

The cutoff derives from the continuing conflict between Libya’s two rival political factions over control of the central bank and oil revenue.

Oil prices rose on Monday, recovering some losses from late last week, amid the halt in Libyan exports and concerns about the coming decision on OPEC+ production levels.

The political crisis involves a struggle for power between the eastern government, led by commander Khalifa Haftar’s Libyan National Army, and the internationally recognized western government in Tripoli, led by Prime Minister Abdulhamid Dbeibeh.

The NOC reported a 63% drop in oil production last week due to the shutdown, which began Aug. 26. Output was estimated at 591,000 barrels per day, down from 1.2 million barrels in late July.