Escalating tensions with Iran and the effective closure of the Strait of Hormuz are plunging global energy markets into severe turmoil. Abu Dhabi National Oil Company (ADNOC), the United Arab Emirates' state-owned energy giant, has been compelled to implement extensive well shutdowns, causing the nation's daily production to plummet by more than half. Combined with successive production cuts by Saudi Arabia and Iraq, the overall reduction in Middle Eastern output now represents 7% to 10% of global demand. According to a Reuters report on Monday, informed sources revealed that ADNOC has enacted comprehensive well closure measures across its onshore and offshore facilities. This has led to a drop of over 50% in daily production compared to normal levels for this OPEC member, which ranks as the group's third-largest producer. The UAE's crude output in January was close to 3.4 million barrels per day, accounting for over 3% of global demand. Simultaneously, the crucial energy hub of Fujairah port faced another drone attack on Monday, forcing a suspension of oil loading and unloading operations. The port had just resumed operations on Sunday following a previous attack, only to be disrupted once again. The Strait of Hormuz, which normally handles approximately one-fifth of global crude shipments, has seen a de facto halt to commercial shipping, causing massive disruptions to international energy markets. With Saudi Arabia reducing output by approximately 20% and Iraq cutting about 70%, analysts estimate that total crude production reductions across the Middle East have reached 7 to 10 million barrels per day. The depth of the impact is continuing to widen.

Strait Blockade Severely Impacts Global Oil Transport Artery

The Strait of Hormuz is one of the most critical maritime chokepoints in the global energy supply system, normally handling about one-fifth of the world's oil shipments. The forced interruption of commercial shipping is having a massive impact on international energy markets. As reported by Reuters, ADNOC has publicly confirmed reductions in offshore production, and informed sources further indicated that all offshore production has currently ceased operations. According to Kpler data, ADNOC's pre-conflict offshore crude exports were substantial: Upper Zakum crude exports were slightly over 1 million barrels per day, Das Blend crude exports were around 700,000 barrels per day, and Umm Lulu field exports were approximately 230,000 barrels per day. Onshore, exports of Murban crude had shown a significant increase prior to the disruptions. Kpler data indicated that daily exports jumped from 1.135 million barrels in January to about 1.5 million barrels in February. Currently, onshore production is also affected by the shutdowns.

Combined Middle East Output Cuts Reach 7% to 10% of Global Demand

The UAE is not the only oil producer affected. OPEC's largest producer, Saudi Arabia, has cut approximately 20% of its production. The reductions are even more severe in OPEC's second-largest producer, Iraq, where output has shrunk by about 70%. Based on estimates from various analysts, the combined reduction in oil production across the Middle East amounts to 7 to 10 million barrels per day. This volume of supply shortfall is equivalent to 7% to 10% of global oil demand. The impact is particularly direct for Asian and European importers who are highly dependent on Gulf crude.

ADNOC's Offshore and Onshore Production Under Pressure

Two informed sources told Reuters that the shutdown measures implemented by ADNOC cover both onshore and offshore production and constitute temporary wellhead closure operations. The export profile shown by Kpler data confirms the widespread nature of this production disruption. Combined exports from the three major offshore fields—Upper Zakum, Das Blend, and Umm Lulu—accounted for a significant portion of ADNOC's total exports before the conflict and have now ground to a halt. Although onshore Murban crude exports expanded in February, onshore production has also succumbed to the impact as the conflict persists. Currently, there are no signs of the commercial shipping blockade in the Strait of Hormuz being lifted. The timeline for restoring Middle Eastern energy supplies remains highly uncertain, and global energy markets are expected to remain under significant pressure in the short term.