Kuwait did not specify the volume of barrels per day removed from the market. But the state-run Kuwait Petroleum Corporation sought to reassure global buyers, saying it “remains fully prepared to restore production levels as soon as conditions allow”. In January, the country produced approximately 2.6 million barrels per day.
Oil prices rose 35% – the biggest weekly gain in futures trading history
The announcement comes against the backdrop of a stunning rise in oil prices. On Friday, U.S. oil futures posted their biggest weekly gain since the contract went into effect in 1983, rising 35.63% to close at around ₹7,813 per barrel (West Texas Intermediate). Brent crude, the global benchmark, rose 28% over the same period, the steepest weekly gain since April 2020, settling at around ₹7,953 per barrel after the hike ₹625 in one session.
The catalyst is the ongoing conflict between the US and Iran, which has effectively paralyzed shipping through the Strait of Hormuz. The narrow waterway – the only maritime outlet from the Persian Gulf – handles around 20% of global oil consumption each day. With shipowners worried about Iranian attacks, tankers have halted transit altogether, creating an acute bottleneck that analysts say the market is just beginning to absorb.
“The market is shifting from pricing in pure geopolitical risk to dealing with tangible disruption,” Natasha Kaneva, Head of Global Commodities Research, JPMorgan
The barrels are piling up with nowhere to go – Iraq has already cut 1.5 million BPD
The consequences of the blockade are already rushing through the region. With tankers stranded, oil is piling up at export terminals in the Persian Gulf faster than storage infrastructure can absorb it. Producers are forced to reduce output simply because they have run out of places to put barrels.
Iraq has already taken the most drastic measures of any Gulf producer, cutting production by 1.5 million barrels a day as storage capacity reaches capacity, Iraqi officials told Reuters on Tuesday. Kuwait’s announcement signals that the storage crisis is now spreading to its neighbors.
JPMorgan estimates that if the Strait of Hormuz remains closed, total production in the Persian Gulf could exceed 4 million barrels per day by the end of next week. In a note last Sunday, Kaneva warned that if the US-Iran war lasts more than three weeks, Gulf Arab countries could completely run out of storage capacity and be forced to shut down production wholesale – a scenario that would push Brent crude higher. ₹8,590 per barrel ($100).
Qatar LNG shutdown deepens crisis – natural gas markets rattled
The disruption goes far beyond oil. Qatar, one of the world’s biggest exporters of liquefied natural gas (LNG), halted production on Monday after the Iranian attacks. Qatar accounts for around 20% of global LNG exports – a commodity relied on to generate electricity and heat homes in Asia, Europe and beyond. The current disruption in oil and gas supplies has compounded the energy shock facing import-dependent economies around the world.
What does the Strait of Hormuz crisis, Kuwait oil production curbs mean for India?
For India, the crisis is not a distant geopolitical event – it is a direct economic threat with a specific Kuwaiti dimension. Kuwait alone accounts for 10.1% of all oil and condensate exports flowing through the Strait of Hormuz (US Energy Information Administration, Q1 2025).
Within India’s own import basket, Kuwait supplies around 3% of the country’s total oil imports – making it the fifth largest supplier to India, behind Russia (36%), Iraq (20%), Saudi Arabia (13%) and the United Arab Emirates (9%) (PPAC and ICRA Research, FY2025). In dollar terms, India imported $3.09 billion (approx ₹In 2024 alone, 26,574 million crowns worth of oil from Kuwait (UN COMTRADE database).
Together, imports from Iraq, Saudi Arabia, Kuwait and the United Arab Emirates, which are routed through the Strait of Hormuz, account for approximately 45-50% of India’s total oil imports (ICRA Research, citing PPAC data, June 2025).
Kuwait’s production cut directly shrinks this pool. According to the Petroleum Planning & Analysis Cell, approximately 2.5-2.7 million barrels per day of Indian crude imported mainly from Kuwait, Saudi Arabia, Iraq and the United Arab Emirates passes through the Hormuz MOPEDO Corridor.
India is the second largest destination for cross-strait oil, receiving 14.7% of all flows as of Q1 2025 (US EIA, cited by Visual Capitalist) – second only to China. The country imports approximately 88% of the crude oil it consumes (PPAC, Ministry of Petroleum and Natural Gas), spending US$137 billion (roughly ₹11.78 lakh crore) for crude oil imports in the fiscal year ending March 2025 (Ministry of Petroleum and Natural Gas). Roughly 60% of India’s natural gas imports also pass through the strait (ICRA Research, June 2025) – meaning the blockade pushes both oil and gas pipelines into the country at the same time.
Every $10 growth costs India $13-14 billion a year
The arithmetic of the price increase is reprehensible. Each $10 per barrel increase in global oil prices adds approximately $13-14 billion ( ₹1.12-1.20 lakh crore) to India’s annual import bill (ICRA Limited; confirmed by former NITI Aayog chief Amitabh Kant). Economists at DBS Bank calculated that the same $10 increase would widen India’s current account deficit by about 0.35% of GDP (DBS Bank Research Note).
With Brent already up 28% this week – and JPMorgan warning of a potential breach of $100 a barrel if the strait remains closed – the cumulative hit to India’s trade balance could be severe. If Brent rises to $120 a barrel, India’s oil trade deficit could rise to around $220 billion ( ₹18.92 lakh crore), potentially pushing the current account deficit above 3% of GDP (DSP Mutual Fund Netra Report, March 2026).
The rupee is already sinking. The Indian currency broke 92 against the US dollar on March 4, touching an all-time low of 92.8 (Bloomberg/CNBC-TV18, March 4, 2026), even as the average price of India’s basket of crude rose from $63.08 a barrel in January to $85.43 in March (The most dramatic increase this week preceded 202 Cell Analysis, oil) moves.
India’s strategic reserves: 40 days buffer, nothing more
India is not completely without a cushion. The country holds around 100 million barrels of commercial oil reserves – including strategic oil reserves in Mangalore, Padur and Visakhapatnam – enough to cover roughly 40 to 45 days of demand if the Hormuz flows are completely disrupted (Sumit Ritolia, Senior Research Analyst, Refining and Modelling, Kpler).
However, this buffer is just that – a buffer, not a solution. “The country maintains strategic oil reserves alongside commercial reserves held by refiners and oil marketing companies. These reserves are intended to manage temporary supply shocks rather than permanent outages,” Ritolia (Kpler) noted. If the U.S.-Iran conflict crosses the three-week threshold that JPMorgan has called the point of no return for Gulf producers, Indian supplies would be nearing exhaustion just as the global market is facing its worst production shock in a decade.
