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 effectively closed the Strait of Hormuz and launched attacks on Gulf energy sites, leading 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 hit global oil demand hard. It also exceeds the drop in production 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 about 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.
Those accounted for the bulk of the monthly decline. Bahrain and Oman, which were also affected, are not members of Opec and are smaller producers compared with the others.
The shutdowns come at a time when Opec members had only recently begun restoring production cut since late 2022, a move that had been under way for less than a year before the war began. At a video conference on April 5, the group approved a symbolic output increase for May, affirming the unwinding process. The group is set to meet again on May 3.
Meanwhile, Gulf states are working to rebuild sites damaged by Iranian attacks and restore output during a two-week ceasefire that 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 field and four refineries, including Ras Tanura, the kingdom's largest with capacity of 550,000 bpd, 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. About 300,000 bpd at the Manifa field has also been restored, with work continuing to recover a further 300,000 bpd at Khurais.
On Monday, Iraq said production at the Khor Mor gas facility in the 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 the drop in production increasing to 9.1 million bpd across Iraq, Saudi Arabia, Kuwait, the UAE, Qatar and Bahrain this month. It expects a gradual resumption on the basis of the war concluding in April.
