Kuwait: Kuwait crude output muted in March; Brent prices increase
Brent crude oil prices averaged USD 84.96 per barrel in March, up 3.9% from February. On 29 March, the commodity traded at USD 87.42 per barrel, up 4.3% from 29 February. Supply cuts by OPEC+ and robust demand drove up prices.
Turning to production, Kuwait oil output rose slightly to 2.45 mbpd (million barrels per day) in March, up from 2.43 mbpd in February but remaining at one of the lowest levels since 2021.
Oil production declined 4.1% last year, and is expected to fall a further 3.5% this year. Output will be weighed on by a voluntary 0.14 mbpd cut agreed last year with OPEC+, set to last until June. These cuts could be extended, posing a downside risk to the outlook. Looking further ahead, our panelists expect oil production to rise from 2025 onward; the government said in March it is still seeking to raise output capacity to 4.0 mbpd by 2035.
Meanwhile, refined fuel production is set to boom again in 2024, after the Al-Zour refinery—the second-largest in the Middle East—fully opened in late 2023. Output is currently at 1.4 mbpd, according to comments by the head of the national oil firm made in March, and is expected to rise “soon” to 1.6 mbpd, up from 1.0 mbpd on average in 2022.
On the new Al-Zour refinery, analysts at Fitch Solutions commented:
“The new 615,000 b/d Al Zour refinery is set to be one of the largest refineries in the world, having begun phase one commercial operations enabling roughly 200,000 b/d of production in late 2022. The production of low sulphur fuel oil for domestic power generation will account for 40% of the refinery’s output, whilst the remaining 60% will be dedicated to the production of ultra-low sulfur diesel, kerosene, jet fuel and naptha for export purposes.”
On the outlook for crude oil output, Analysts at EIU said:
“Since the start of the century, the development of the heavy oil reserves in northern Kuwait has been central to efforts to increase production capacity. However, the plans have moved extremely slowly owing to quarrels over the involvement of international oil companies (IOCs) and to the country’s bureaucratic sluggishness.”