Oil firms cut output as crisis blocks key shipping lane

RIYADH/CAIRO — The Abu Dhabi National Oil Company said on Saturday it is actively managing offshore output levels to address storage requirements amid regional tensions, while its onshore operations are continuing.

"This approach preserves operational flexibility and will enable the company to resume normal operations without prolonged delay," ADNOC said in a statement.

The regional conflict, now in its 10th day, has blocked shipments through the Strait of Hormuz, the crucial waterway responsible for roughly 20 percent of global oil and liquefied natural gas supply. Analysts have predicted Saudi Arabia would soon have to cut output as their oil storage fills up.

ADNOC said its operations are continuing, and that it is using export capacity that bypasses the strait as well as international storage facilities to ensure supply continuity to global markets.

Saudi state oil giant Aramco is temporarily diverting some crude shipments to the Red Sea port of Yanbu to ensure supply continuity for customers unable to access the Gulf, Saudi state media said on Saturday. Reuters reported on Friday that its shipments from the Red Sea are increasing but the volumes are far from enough to offset the drop from the crisis-hit strait.

"Business units are assessing the situation on a product-by-product and transaction-by-transaction basis, considering the ongoing disruption that is affecting shipping through the Strait of Hormuz," ADNOC said.

The company has activated well-established protocols and is working closely with the authorities to protect its people, assets and operations, it added.

Kuwait's major national oil company, the Kuwait Petroleum Corporation, began cutting oil output on Saturday and declared force majeure, adding to earlier oil and gas reductions from Iraq and Qatar.

Citing escalating regional tensions, the company said the adjustment is "strictly precautionary" and that it "remains fully prepared to restore production levels once conditions allow".

Agencies - Xinhua