Kuwait Oil Giant Says OPEC Hikes Suggest Tighter Market

Kuwait’s state energy company said OPEC+’s latest super-sized supply hike and recent interactions with customers suggest persistent demand growth beyond the summer driving season.  

“We’re seeing some potential tightness in the market, which gives us an opportunity to capture market share in the future,” Sheikh Nawaf Al-Sabah, chief executive officer of Kuwait Petroleum Corp., told Bloomberg TV in an interview on the sidelines of a seminar held by the Organization of the Petroleum Exporting Countries in Vienna. 

Tanker tracking by Bloomberg shows that the Gulf state’s crude exports surged to a 19-month high in June as the OPEC+ alliance brought curbed barrels back. Most of Kuwait’s oil flows to Asian countries, including China, Japan and South Korea. Sheikh Nawaf said recent demand has been driven by Asia in particular, noting that KPC’s global business partners have been asking the company if it has additional barrels.

There are indications that the customer isn’t concerned about a peak in demand, “certainly in China, and also is looking toward quality of the supplier, and that is us, because we are committed to a low-cost and low-carbon intensity barrel, and will continue for decades to come.”

Producers are seeing a market that will continue to grow, Sheikh Nawaf said, with anywhere between 1 million to 1.3 million barrels a day of additional demand growth over the year. 

Bloomberg News hasn’t received accreditation to cover the OPEC seminar, despite multiple requests. No explanation has been given. Sheikh Nawaf spoke outside the event.

As tensions between Israel and Iran escalated last month into open conflict, KPC communicated closely with its Gulf partners to ensure a steady supply of oil to the market, according to Sheikh Nawaf. There had been concerns that the fighting could disrupt tanker traffic through the Strait of Hormuz, a critical chokepoint for exports from the Middle East.

“If you go back to the 1980s, there was the Iran-Iraq War, then the Iraqi invasion of Kuwait, followed by continuous sanctions,” he said. The Middle East “has always been a region that faces security risks and a security premium. However, it’s very important to know that in over eight decades of oil flowing through the Strait of Hormuz, not a single day has that Strait been closed.”

Sheikh Nawaf also said:

KPC is seeing strong demand for refined products, even in Europe, where the middle distillates market is “actually quite strong.”
KPC has plans to partner with international companies, not just in its northern fields, and is currently working on a potential remodel, while resources will always be owned by the State of Kuwait.
Kuwait has a current refining capacity of 1.4 million barrels a day, “and we’re moving that to 1.6” million; the country is refining more than half the oil it produces.
The 615,000 barrel-a-day Al-Zour refinery is well equipped to supply the market and give Kuwait opportunities to capture market share, especially in Europe.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.