The daily production of oil in the United Arab Emirates has fallen by more than 50%, as the conflict with Iran and the effective closure of the Strait of Hormuz forced state-owned ADNOC to go on extensive production shutdowns, according to Reuters.
Less than half production
According to two sources cited by Reuters, state oil company ADNOC has been forced to engage in extensive “shut-ins”, or temporary drilling shutdowns, which has resulted in the country’s daily oil production being cut by more than half.
The virtual disruption of commercial shipping through the Strait of Hormuz, which is normally used to transport about a fifth of the world’s oil supply, has caused serious turbulence in international energy markets.
Earlier on Monday, ADNOC suspended oil loading operations at the port of Fujairah, a major oil supply and storage hub in the United Arab Emirates, following a drone attack. Activities at the port had just resumed on Sunday, following another attack the previous weekend.
According to secondary source data submitted to the Organization of the Petroleum Exporting Countries (OPEC), the United Arab Emirates produced just under 3.4 million barrels of oil per day in January, an amount equivalent to more than 3 percent of global demand. The country is the organization’s third-largest producer.
The country is the organization’s third-largest producer.
Extended production outages in the Middle East
The two sources with knowledge of the case said the production outages affected both onshore and offshore facilities. They asked not to be named because of the sensitivity of the issue.
ADNOC has already announced that it is reducing offshore production, with sources saying that all production from offshore fields has now been shut down.
Before the conflict began, ADNOC was exporting just over 1 million barrels per day from the Upper Zakum field, nearly 700,000 barrels per day from Das Blend and about 230,000 barrels per day from the Umm Lulu field, according to offshore production data from Kpler, a data analytics firm.
Exports of onshore Murban crude had increased in February to about 1.5 million barrels per day, up from 1.135 million barrels per day in January, according to the same data.
Energy crisis across the Middle East
At the same time, the energy crisis is spreading across the Middle East. Saudi Arabia, OPEC’s largest producer, has cut its output by about 20%, according to a previous Reuters report. Iraq, the organization’s second-largest member, has cut its production by about 70%.
Analysts estimate that total oil production cuts in the Middle East now range between 7 million and 10 million barrels per day, equivalent to about 7% to 10% of global demand.
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