Kuwait is single handedly helping oil prices to climb after a nearly 7% fall in the wake of failed Doha negotiations yesterday.
Oil workers staged a strike, abandoning their posts and walking off the job over the weekend. An ongoing pay dispute has led to the protest, which in turn has caused the state-owned Kuwait Oil Company significant losses. KOC took to Twitter to report on the damage, stating that oil production fell to 1.1 million barrels per day on Sunday. The company has on average a production rate of nearly 3 million barrels a day. Additionally, the state-owned refining company, Kuwait Petroleum Corp., announced a drop in refined products from 930,000 to 520,000 barrels per day.
Analysts are unsure how this protest will affect the oil price in the short term. Apart from a slight climb (after a significant drop), the oil price remains low. However, any prolonged significant drop in production from Kuwait would have a far larger impact on global oil supplier that the proposed oil production cap that failed to come to fruition. Given that the production cap woul dhave frozen production at January levels, when there was already a supply glut, the freeze would have done little to secure the price rises producers would like to see. However, if Kuwait fails to raise production and bring its workers back, the global market see unexpected price climbs.
Oil prices are tricky to gauge at the moment, but oil bulls will no doubt see the silver-lining in the Kuwaiti oil workers’ strike.