Analysts at JPMorgan said in a note that crude oil supplies from Iraq and Kuwait could start to shut down within days if the Strait of Hormuz remains closed, potentially leading to a 3.3 million barrel per day drop in supplies by the eighth day of the latest Middle East conflict.
The bank said on Tuesday that Iraq and Kuwait have approximately three days and 14 days respectively before they are forced to halt crude oil exports passing through the strait.
The Strait of Hormuz is a narrow waterway of great strategic importance linking the Gulf to the north with the Gulf of Oman and the Arabian Sea to the south. It is one of the most important oil transport routes in the world, as about one-fifth of global oil and liquefied natural gas flows pass through it.
JPMorgan stated that if the shutdown is prolonged, the reduction in oil supplies could worsen to 3.8 million barrels per day by the fifteenth day and 4.7 million barrels per day by the eighteenth day of the conflict.
Two Iraqi oil officials told Reuters on Tuesday that Iraq would be forced to cut its oil production by more than three million barrels per day within a few days if oil tankers could not move freely through the Strait of Hormuz and reach loading ports.
US President Donald Trump said on Tuesday that the US Navy could begin escorting oil tankers through the Strait of Hormuz if necessary.
Iranian media quoted a senior Revolutionary Guard official as saying that the Strait of Hormuz is closed and that Iran will fire on any ship that tries to pass through.
