US-Israeli War on Iran Causes Major Oil, Gas Disruptions
Kuwait announced?cuts at the weekend due to the U.S. and Israel war against Iran.
Analysts predict the United Arab Emirates (UAE) and Saudi Arabia, which are running out of oil storage, will have to reduce their output as well.
Here are the main energy disruptions that have occurred so far.
Three industry sources reported on March 8 that the Iraqi production has collapsed: "the country's oil output from its southern oilfields is down 70%, to 1.3 million barrels a day (bpd), from 4.3 millions barrels a day (bpd), before the war. Exports through the Strait of Hormuz are still closed." In addition, several companies in Iraqi Kurdistan have halted production at their fields out of caution. In February, the region exported 200,000 barrels per day (bpd) via pipeline to Turkey. Kuwait Petroleum Corporation declared force majeure and cut oil production on March 7, due to the war closing exports through the Strait of Hormuz. United Arab Emirates: Abu Dhabi National Oil Company said it actively managed offshore output levels on March 7, to maintain "operational flexibility". Saudi disruptions. Saudi Arabia is the world's largest oil exporter and has suspended production at its 550,000 bpd Ras Tanura Refinery. It also began rerouting crude loads from eastern ports towards Yanbu on the Red Sea. Saudi Defence Ministry said that the refinery was hit again on 4 March, but no damage occurred. QatarEnergy LNG stopped: Qatar halted operations at its LNG plants on March 2, and declared force majeure the following day. This affected some of the largest LNG plants in the world and a source which supplies around 20% of global LNG. Israel has also cut back on some of its oil and gas production. Iran's Revolutionary Guards claimed that they targeted an Israeli refinery on March 7, after Iran's Tehran Refinery was attacked, according to state media. Haifa's air raid sirens were sounded, but no damage was reported.
Shipping Strait of Hormuz. Traffic through the Strait has been largely shut down after Iran attacked five ships. Only a few tankers have transited, cutting off an important artery that accounts for around 20% of global LNG and oil supply. Iran declares Strait closed. A senior Iranian Revolutionary Guards officer declared on March 2, that the Strait of Hormuz is closed, and warned Iran that it would fire "on any ship trying to pass". Iranian state media reported that the Guards claimed to have hit a Marshall Islands flagged tanker on March 7. Since March 1, the United Kingdom Maritime Trade Operations has reported attacks on ships in the area, including a tanker 'off Kuwait and a ship carrying containers in the Strait of Hormuz. Major marine insurers have cancelled war risk coverage for vessels operating in Iranian, Gulf or adjacent waters. US provides assurances: Trump stated that the U.S. Navy would be able to escort oil tankers through the Strait. He also directed the U.S. International Development Finance Corporation (IDFC) to provide financial guarantees and political-risk insurance for Gulf shipping. However, shipowners and analysts are skeptical.
Impact on consumers: China reduces refinery runs. Chinese refineries are closing crude units or moving up planned maintenance because of?disrupted oil flows. Other refineries are also cutting their runs. India is vulnerable. With crude oil stocks covering only 25 days' demand, New Delhi has scrambled to find alternatives and increased Russian oil imports after the U.S. Treasury 30-day waiver. India has also ordered that its refineries prioritize the production of liquefied petrol gas (LPG), which is used to cook, over domestic gas supplies?to industries including fertilizer producers. Indonesia changes its sourcing: Indonesia will increase U.S. crude oil imports to compensate for the reduced Middle East supply. Alternative supplies are available: Cargoes can be shipped from Brazil, West Africa, and the U.S. but it takes over a year to get them to Asia, and they are more expensive due to soaring freight costs. (Reporting from Ahmad Ghaddar, London; Nerijus Adomatis, Oslo; Editing done by Matthew Lewis Gareth Jones Helen Popper
(source: Reuters)
