Two independent sources told reporters that Saudi Arabian Oil Co., commonly known as Aramco, has begun reducing output at two oilfields in response to severe logistical gridlock in the Gulf. The sources gave no immediate details on the identities of the fields or the precise scale of the production cuts. Aramco has declined to comment, while some of its crude loadings have been rerouted to the Red Sea port of Yanbu.
The production reductions underscore how disrupted transit through the Strait of Hormuz has become after the U.S.-Israeli war on Iran and follow-up attacks on the waterway. The strait, a critical chokepoint carrying about a fifth of global oil and liquefied natural gas shipments, has seen traffic effectively slow to a near halt.
Neighboring countries have likewise experienced supply interruptions. Kuwait Petroleum Corporation has trimmed output and declared force majeure on shipments. Qatar halted liquefied natural gas production at its Ras Laffan export hub after drone strikes and also declared force majeure. In Iraq, production from the main southern fields has fallen by roughly 70% as storage capacity has been reached. The United Arab Emirates’ ADNOC is reducing offshore output, and Bahrain’s Bapco Energies has declared force majeure.
These unprecedented interruptions have unsettled energy markets and pushed Brent crude futures to levels near $120 a barrel, their highest since mid-2022. While Saudi Arabia has accelerated transfers of crude from the Red Sea route through the East-West pipeline to Yanbu, analysts referenced by sources say those redirected volumes are not large enough to replace the millions of barrels sidelined by the closure of Gulf transit lanes.
Market observers warn that consumers and businesses around the world could face months of elevated fuel prices as suppliers contend with damaged infrastructure and paralysed logistics even if hostilities end quickly. The extent and duration of those price effects will depend on how fast shipping and export facilities are restored, and on how effectively producers can compensate for the volumes currently offline.
Summary
Aramco has started curtailing output at two oilfields amid a near-halt in Strait of Hormuz shipping caused by recent hostilities. The company is rerouting some cargoes to Yanbu, but regional production cuts and force majeure declarations by several producers have tightened global markets and driven Brent toward $120 a barrel.