Gulf conflict pushes OPEC crude output to multi-decade low Survey by Bloomberg

Crude oil production by the Organisation of the Petroleum Exporting Countries fell to its lowest level in 36 years in April as the war involving Iran continued to disrupt exports from the Persian Gulf and forced additional production shutdowns, according to a Bloomberg survey.

The survey showed that OPEC output declined by 420,000 barrels per day (bpd) to 20.55 million barrels per day (MMbpd) last month, the lowest level since 1990. The drop was driven primarily by deeper production losses in Kuwait and Iran.

OPEC production had already plunged by 8.6 MMbpd in March — the largest decline in decades — after the conflict led to the closure of the Strait of Hormuz shipping route.

The disruption in the Persian Gulf, described as the largest oil-market shock in history, has pushed up prices for jet fuel, diesel and gasoline, raising concerns over renewed inflation and the risk of a global recession.

Oil markets have also been affected by uncertainty surrounding diplomatic efforts to end the conflict. Oil futures in London fell 7% on Wednesday following reports that the United States believes an agreement with Iran could be reached soon.

The organization was further shaken last week when the United Arab Emirates announced it would leave OPEC after years of disagreements with group leader Saudi Arabia over production limits. Bloomberg’s April survey still included UAE figures for the final month before its withdrawal officially took effect on May 1.

Despite the continuing closure of the Strait of Hormuz, several OPEC members and allied producers agreed last weekend to move ahead with a nominal and largely symbolic increase in output quotas for June. The measure would continue the alliance’s previous plan to gradually restore halted production levels.

According to the survey, Kuwait recorded the largest monthly losses, with production falling by 470,000 bpd to 800,000 bpd — less than one-third of pre-war levels. Tanker-tracking data compiled by Bloomberg showed Kuwaiti exports fell to just 22,000 bpd.

Iran recorded the second-largest decline. Although Tehran initially managed to maintain exports while restricting access through the strait for others, its shipments have increasingly come under pressure from a US blockade imposed on April 13.

US Central Command said on Monday, May 4, that American forces had redirected 50 vessels since the blockade began. Iran’s oil production fell by 180,000 bpd to 3.05 MMbpd in April, doubling the scale of its production pullback since the start of the war.

By Tamilla Hasanova