Hormuz Crisis Resumes, Gulf Producers Scramble for Mitigation Strategies

The Hormuz crisis has come full circle, with hostilities resuming and tanker traffic through the Strait of Hormuz once again at a standstill. This marks a return to square one for energy markets, despite initial optimism in May when the US-Iran Islamabad Memorandum of Understanding (MoU) was signed.

The crisis has been anticipated for years, but its impact on regional players is now becoming clear. Gulf producers like Saudi Arabia and the UAE have access to export routes that bypass the strait, while others like Qatar and Kuwait do not. The latter are forced to mitigate exposure, rather than avoiding it entirely.

Qatar's minister of energy, Saad al-Kaabi, has stated that his country will not build infrastructure to bypass the Strait of Hormuz for LNG exports. Instead, they will rely on their international portfolio as part of their resilience strategy. Kuwait Petroleum Corporation (KPC) also has overseas arms, but its activity remains limited compared to peers like Aramco or Abu Dhabi National Oil Company (ADNOC).

The crisis is affecting OPEC and OPEC+'s near-term future, with the group's production schedule adjusted to signal a plan to keep unwinding long-running voluntary cuts. Iraqi Prime Minister Ali al-Zaidi has even suggested that Iraq could consider suspending its membership in the group.