Kuwait shutting oil production as storage fills up

Kuwait has begun cutting production at some oil fields after running out of room to store its bottled-up crude, people familiar with the matter said, signalling a broader storage crisis that poses new risks to the global market.

The country, a founding member of the Organisation of the Petroleum Exporting Countries, is discussing limiting its production and refining capacity further, to just what it needs to cover domestic consumption, the people said. A decision on those broader cutbacks is expected within days, they said.

Data provider Kpler said it has seen indications that Kuwait has started to cut production, adding that the country would have to cut more output in the coming days, as storage would otherwise fill up in around 12 days.

Shutting in an oil well risks long-term damage to reservoir pressure and incurs high restart costs, usually making it a measure of last resort. Restarting production can take days or even weeks, depending on the reservoir.

“It will not be all back the same day exports are possible again,” said Giovanni Staunovo, commodity strategist at UBS.