Kuwait’s three oil refineries were operating at reduced rates on Monday on the second day of an open-ended labor strike.
Kuwait National Petroleum Co. is processing about 510,000 to 520,000 barrels of oil a day, Khaled Al-Asousi, spokesman for the state-oil company, said by phone on Monday. All three refineries are operating, he said. They have a combined capacity of about 900,000 barrels a day. A call and text message to the labor union weren’t answered.
Kuwait’s crude production on Sunday dropped to 1.1 million barrels a day, Saad Al-Azmi, deputy chief executive for finance and spokesman at Kuwait Oil Co., said in posts on Instagram and Twitter on Sunday. Kuwait Petroleum Corp., the parent company for KOC and other operating units, will provide fuel to the local market and can meet demand from international customers for exports, it said on Twitter on Sunday. KPC and KOC spokesmen were not immediately available for comment on Monday.
Kuwait is among Middle Eastern oil producers that are cutting spending and benefits to plug holes that the oil-price drop of nearly 30 percent in the past year has punched in government budgets. Prices have fallen as rising output from the Organization of Petroleum Exporting Countries and other suppliers has created a global glut. Kuwait produced 2.81 million barrels a day last month, making it OPEC’s fourth-largest member, while worldwide supply exceeded demand by 1.6 million barrels in the first quarter, according to the International Energy Agency.
‘Shocking’ Decline
The plunge in Kuwait’s output “is just shocking,” Edward Bell, a commodities analyst at Dubai-based bank Emirates NBD PJSC, said Sunday by phone. “That would take care of the surplus right there. In this market that is so driven by sentiment, for sure it will have an impact on price.”
The disruption came as output talks Sunday between the world’s biggest producers ended without any agreement on limiting supplies. Saudi Arabia said it won’t restrain its production without commitments from other major producers including Iran, which has ruled out a freeze for now. Brent crude for June settlement dropped as much as $3, or 7 percent, to $40.10 a barrel Monday on the London-based ICE Futures Europe exchange.
Members of the 13,000-strong Oil & Petrochemical Industries Workers Confederation are protesting cuts in their wages and benefits, Saif Al Qahtani, the union’s leader, said by phone Thursday. About 6,000 workers walked off the job when the strike began, CNBC Arabiya cited him as saying.
The Kuwaiti government asked KPC to find workers to keep the operations running and told authorities to take legal action against anyone causing a suspension of activities at Kuwait’s vital facilities, state-run Kuwait News Agency reported on Sunday, citing a statement from the cabinet.
Such a wide-ranging strike that affects vital industries is rare in the Gulf, said Bell. “This is not the sort of thing you’d expect to see in this part of the world.”
Omani labor unions called off a strike in November after talks with the government and oil companies about potential layoffs. Kuwaiti port workers stayed off their jobs in 2011 and 2012 in stoppages that didn’t ultimately affect oil shipments.
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