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Kuwait Warns Strait of Hormuz Closure Could Trigger Global Economic Catastrophe

Kuwait has declared force majeure on oil exports after Iran closed the Strait of Hormuz, according to CEO Sheikh Nawaf Al-Sabah. He warned that the closure will cause a catastrophic domino effect on the global economy, disrupting supply chains beyond the oil sector. The Strait, which handles 20% of the world's oil, is blocked due to Iran's attacks, and recovery could take three to four months. International emergency oil reserves are insufficient to offset the shortfall. Additionally, petrochemical and fertilizer shortages threaten food security worldwide. The conflict escalated after U.S. and Israeli strikes on Iran, with Iran targeting Gulf infrastructure.

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Kuwait Warns Strait of Hormuz Closure Could Trigger Global Economic Catastrophe

Kuwait's state oil company has halted exports and warned that Iran's closure of the Strait of Hormuz will have beyond catastrophic effects, triggering a domino effect across the global economy.

Kuwait's Oil Production Halted

  • Sheikh Nawaf Al-Sabah, CEO of Kuwait Petroleum Corporation, announced at the CERAWeek energy conference in Houston that Kuwait has declared force majeure on its oil delivery contracts.
  • Production has been reduced to meet only domestic consumption; prior to the conflict, Kuwait produced about 2.6 million barrels per day.
  • Full production recovery is expected within three to four months after shutting oil wells.

Global Economic Domino Effect

  • Al-Sabah described the impact as "beyond catastrophic" and a "domino effect" that extends through global supply chains.
  • This warning surpasses earlier statements from Saudi Aramco, which called the war's consequences "catastrophic."
  • The Strait of Hormuz, critical for 20% of global oil supply, is disrupted due to Iran's attacks on commercial vessels.
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Insufficient Emergency Measures

  • The International Energy Agency's emergency oil release of 3 million barrels per day from over 30 nations, including the U.S., is inadequate.
  • Al-Sabah stated that these stocks do not compensate for production curtailments in Iraq, Saudi Arabia, and the UAE.
  • "There is no substitute for the Strait," he emphasized.

Broader Supply Chain Disruptions

  • Petrochemical shortages will impact food packaging, complicating global food transportation.
  • Fertilizer exports from the Gulf are halted during the planting season, potentially reducing harvests by up to 50% in some developing nations.

Escalating Conflict in the Gulf

  • Iran's missile and drone attacks on Gulf Arab infrastructure followed U.S. and Israeli airstrikes on Iran starting February 28, 2025.
  • Kuwait has been directly targeted, with attacks on refineries and civilian sites, undermining Iran's claims of limiting strikes to U.S. assets.
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