Oil tops $100 as major Middle East producers cut output amid Iran war

Crude oil prices rose above $100 a barrel on Sunday after major Middle Eastern producers cut output as the crucial Strait of Hormuz remains closed due to the Iran war.

West Texas Intermediate It jumped 18.98%, or $17.25, to $108.15 per barrel by 6:12 pm ET. Global standard Brent It advanced 16.19%, or $15.01, to $107.70. US crude rose nearly 35% last week in its biggest gain in futures trading history dating back to 1983.

Kuwait, OPEC’s fifth-largest producer, announced on Saturday precautionary cuts to its oil output and refinery output “due to Iranian threats against the safe passage of ships through the Strait of Hormuz”. State-owned Kuwait Petroleum Corporation did not elaborate on the size of the cuts.

Production in Iraq, the second-largest OPEC producer, has effectively fallen. Production from its three major southern oilfields fell 70% to 1.3 million barrels a day, three industry officials told Reuters on Sunday. Those fields produced 4.3 million bpd before the Iran war.

And the United Arab Emirates, the third-biggest producer in OPEC, said on Saturday it was “cautiously managing offshore production levels to address storage requirements”. Abu Dhabi National Oil Company (ADNOC) said its onshore operations continued as normal.

Gulf Arab states are cutting production as they run out of storage space as the strait’s closure piles up oil barrels with nowhere to go. Tankers are reluctant to transit the narrow waterway because they are worried Iran will attack them. About 20% of the world’s oil consumption is exported through the Straits.

According to reports, the war shows no signs of easing despite Trump’s claim that Iran has “already won” with the naming of Ayatollah Khamenei’s son Mojtaba as its new supreme leader.

Energy Secretary Chris Wright said traffic through the strait would resume on Sunday after the US destroyed Iran’s ability to threaten tankers.

“We’re not very far away before we can resume more regular shipping through the Strait of Hormuz,” Wright told CNN in an interview. “We’re nowhere near normal traffic right now. It’s going to take some time. But again in the worst case it’s a few weeks, not months.”