Crude oil supplies from Iraq and Kuwait could start shutting in within days if the Strait of Hormuz remains closed, potentially cutting 3.3 million barrels per day (bpd) by day eight of the Middle East conflict, J.P. Morgan analysts said in a note.
Iraq and Kuwait have roughly three and 14 days, respectively, before they would be forced to halt crude exports that pass through the strait, the bank said on Tuesday.
The Strait of Hormuz, a narrow, strategically vital waterway between the Persian Gulf and the Gulf of Oman, is one of the world’s key oil transit chokepoints, carrying roughly a fifth of global oil and liquefied natural gas flows.
In a prolonged closure, losses could escalate to 3.8 million bpd around day 15 and 4.7 million bpd by day 18, according to J.P. Morgan.
Iraq will be forced to cut its oil production by more than 3 million bpd in a few days if oil tankers cannot move freely through the Strait of Hormuz and reach its loading ports, two Iraqi oil officials told Reuters on Tuesday.
U.S. President Donald Trump said on Tuesday that the U.S. Navy could begin escorting oil tankers through the Strait of Hormuz if necessary.
Iranian media reported that a senior official from the Islamic Revolutionary Guards said the Strait of Hormuz is closed and that Iran would fire on any ship attempting to pass.
(Reporting by Pablo Sinha in Bengaluru; Editing by Sherry Jacob-Phillips)