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Kuwait declared a further force majeure on shipments of crude oil and refined products, taking into account that it would not be immediately able to meet its full obligations to customers even when the Strait of Hormuz reopens.
State-run Kuwait Petroleum Corp (KPC) issued the notice to customers on April 17, according to a document seen by Bloomberg News. The company previously declared force majeure – a legal clause allowing a company not to fulfill contractual obligations because of circumstances outside its control – on sales of oil and refinery products, in early March, Bloomberg reported at the time.
Kuwait has suffered multiple hits to oil infrastructure, and output is now at levels last seen in the early 1990s after the Iraqi invasion. The latest notice takes into account that full operations will take time to recover once hostilities ease, according to a person familiar with the matter, who asked not to be identified discussing confidential information.
KPC did not immediately respond to a request for comment.
The Iran war has brought Hormuz traffic to a near-standstill, causing storage tanks in the region to fill up and upending global oil markets. The virtual shutdown of the critical waterway is a nightmare scenario for Persian Gulf countries, which rely on energy-export revenues to fund public spending.
US President Donald Trump said on April 20 that he is not likely to extend the two-week ceasefire with Iran, increasing the urgency for negotiators to conclude a deal to end the war. The truce, announced on April 7, expires “Wednesday evening Washington time (Thursday morning, Singapore time),” Mr Trump said, possibly buying more time for negotiations. Hormuz would stay blockaded for now, he said.
Countries across the region have had to reduce output of oil, gas and refined products as a result of the Hormuz shutdown and Iranian strikes. Earlier this month, the US government estimated that more than nine million barrels a day of oil production would be shut in during April.
Kuwaiti officials have said they could return output to pre-war levels within a few months of an end to the conflict. BLOOMBERG