The Iran war wiped out 7.88 million barrels per day of Opec’s production in March, resulting in the biggest supply collapse for the producers’ group in recent decades, the Vienna-based organisation said in its latest monthly report.
Opec production fell 27 per cent to 20.79 million bpd in March, after Iran’s de facto closure of the Strait of Hormuz and its aerial attacks on Gulf energy sites led to output cuts by key producers.
The supply shock surpasses Opec’s cutting back of 6.28 million bpd recorded in May 2020, after the Covid-19 pandemic decimated global oil demand. It also exceeds production outages from the 1970s oil crisis and the 1991 Gulf War.
Iraq's output dropped by 2.56 million bpd - a 61 per cent decline - to 1.63 million bpd. Saudi Arabia, the world’s largest exporter of oil saw its production fall by 2.31 million bpd, or around 23 per cent of its February levels. Its output averaged 7.8 million bpd in March. Kuwait lost more than half its production, which was down 53 per cent to 1.21 million bpd. The UAE’s output declined 45 per cent to 1.89 million bpd. Production shut-ins from these producers accounted for the bulk of the monthly decline. Bahrain and Oman, which were also impacted, are not members of Opec and are smaller producers relative to the others.
The shutdowns come at a time when Opec members had only recently begun restoring production shuttered since late 2022, an unwind that had been underway for less than a year before the war. At a video conference on April 5, the group greenlit a symbolic output increase for May, reaffirming the unwinding process. The group is set to meet again on May 3.
Meanwhile, Gulf states are racing to rebuild sites damaged by Iranian attacks and restore output during a two-week ceasefire, which began on April 8. A day after the ceasefire announcement brokered by Pakistan, Saudi Arabia's energy ministry disclosed the full extent of damage inflicted on the kingdom's oil infrastructure by Iranian strikes. Among the sites hit were pumping stations on the East–West pipeline, the offshore Manifa field, the large onshore Khurais oilfield, and four refineries, including Ras Tanura, the kingdom's largest at 550,000 barrels-a-day capacity and the 465,000 bpd Satorp complex at Jubail.
Since the announcement, Saudi Arabia has restored full pumping capacity through the East–West pipeline, returning about 700,000 bpd lost to Iranian attacks. Around 300,000 bpd at the offshore Manifa field has also been restored, with work continuing to recover a further 300,000 bpd at the large Khurais oilfield.
On Monday, Iraq said that production at the Khor Mor gas facility in its Kurdistan region had resumed. Khor Mor meets the requirements for most of the power stations in the region. The US Energy Administration’s short-term energy outlook for April forecasts production outages rising further, to 9.1 million bpd across Iraq, Saudi Arabia, Kuwait, UAE, Qatar and Bahrain this month. It sees a gradual resumption on the basis of the war concluding in April.
