Kuwait's Economy Hinges on Hormuz Strait Amid Ongoing Gulf Conflict

Kuwait's oil sector has been severely impacted by the ongoing war in the Gulf, resulting in plummeting petroleum exports and a significant contraction of its economy.

The country's reliance on the Strait of Hormuz for crude export is a major concern, as it accounts for over 90% of government revenue and nearly all export earnings. Unlike Saudi Arabia or the UAE, Kuwait lacks pipelines that bypass the strait, forcing its oil exports to sail through the contested waterway.

Kuwait Petroleum Corporation (KPC) CEO Shaikh Nawaf Saud Al-Sabah described the crisis as 'the toughest and biggest' since the 1990 Iraqi invasion. Despite not suffering the same level of destruction as during that conflict, Kuwait's oil sector has still taken a significant hit.

Preliminary data shows the economy contracted by 4.6% year-on-year in Q1 2026, with oil-sector GDP collapsing by 12.5%. The true toll is likely higher, given available economic data only accounts for the first month of conflict.