Most oil producers in the Middle East will see their crude oil production surge by double-digit percentages next year, rebounding from this year’s shut-ins due to the Iran war and the closed Strait of Hormuz.
OPEC’s second-largest oil producer, Iraq, which was the first to slash output in the wake of the shipping disruption, is set to see the biggest percentage jump in production in 2027, at 34.1%, BMI, a unit of Fitch Solutions, said in a report carried by Malaysia’s outlet New Straits Times.
The United Arab Emirates (UAE) – now unconstrained by OPEC membership after leaving the cartel – will see output grow by 33%, Kuwait will raise production by 26.3%, Bahrain by 15.7%, and Saudi Arabia by 14.5%, according to BMI.
As the Strait of Hormuz was de facto closed and traffic through the chokepoint, which handles 20% of global oil and LNG supply, collapsed by about 90%, Middle Eastern oil producers were quickly forced to curtail upstream output as storage spaces filled up. More than 10 million barrels per day (bpd) of crude were wiped off global daily production volumes.
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The world has now lost 1 billion barrels of crude and condensate supply, data from Kpler showed. As of May 22, cumulative crude and condensate supply losses in the Middle East had reached 961 million barrels, with the 1 billion mark breached by the end of May. Outright production shut-ins have also inched higher, with another 100,000 bpd likely to have gone offline in the past week, due to continued pressure in Iraq and Saudi Arabia.
Due to the worst supply disruption in the history of oil markets, OPEC’s oil production has now collapsed to 26-year lows.
A rebound is expected next year, once the Strait of Hormuz crisis is settled. The Middle Eastern producers will be eager to bring back shut-in production but this would likely take months as not all wells could be reactivated quickly, analysts say.
By Charles Kennedy for Oilprice.com
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