Iraqi and Kuwaiti Oil Production Faces Challenging Restart After US-Iran War

The US-Iran war has disrupted oil production in Iraq and Kuwait, forcing them to shut-in older fields and fill storage tanks. This could complicate efforts to restart production when the crisis passes.

According to Hamad Hussain, a senior climate and commodities economist at Capital Economics, a large part of Iraqi and Kuwaiti crude production comes from mature fields that require water injections to maintain pressure. These fields have been operating since the 1930s, which could add technical challenges to restoring oil production to pre-war levels.

Kuwait produced around 2.6 million barrels per day (bpd) of oil before the conflict began on February 28. After sharp falls early in the conflict, output recovered to 1.4 million bpd by June, implying shut-ins of as much as 1.2 million bpd.

The damage caused by shut-ins can also put future production at risk, while restarts can be expensive and take weeks to execute. Iraq has limited storage and ways to bypass the Hormuz Strait, where tankers were attacked in the conflict.