Middle East "production halt" data: production has been cut by 2 million barrels per day, and will exceed 4 million barrels per day before Friday.

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JPMorgan states that just seven days after the outbreak of geopolitical conflict in the Middle East, supply disruptions among oil-producing countries in the Persian Gulf have exceeded expectations and are spreading rapidly.

On March 9, according to Trend Trading Desk, JPMorgan’s commodities research team released an emergency report, based on detailed tank storage capacities and tanker data, issuing a market-alerting prediction:

The current actual production cut is around 2 million barrels/day, but under the dual pressure of nearly saturated storage tanks and severe tanker shortages, by Friday (March 13), regional production cuts will exceed 4 million barrels/day.

The report points out that this figure means global oil supply will lose more than twice Iraq’s national export volume in just two weeks.

As the conflict continues, shipping through the Strait of Hormuz is obstructed, coupled with production cuts by Middle Eastern oil producers, oil prices continue to surge and have already been transmitted to the consumer end. Specifically:

On the seventh day after the conflict, Brent crude rapidly broke through $94 per barrel from around $83 before the conflict, with a weekly increase of more than 13%. The average retail gasoline price in the U.S. jumped to $3.30 per gallon on March 4-5, hitting a two-year high, clearly reflecting the transmission effect at the consumer end.

Production Cut Process: Faster Than Expected, Still Accelerating

JPMorgan’s framework model shows estimated production cuts on the seventh day of the conflict at 2.5 million barrels/day, while data agencies like Kpler tracked reported disruptions at 2 million barrels/day—the small gap between these figures precisely indicates that actual cuts are rapidly approaching the trajectory predicted by the model.

The report clearly states that supply disruptions are no longer limited to isolated oil fields but are starting to spread across the entire region. The core driving mechanism is storage tank saturation forcing upstream shutdowns: when export channels are blocked and floating storage tanks are depleted, oil-producing countries have no choice but to gradually shut down upstream production.

JPMorgan notes that Iraq’s production cuts have moved from warning stage to substantive stage.

Several major southern oil fields have initiated production cuts, initially concentrated in core hubs like Rumaila. However, as storage tanks continue to tighten, larger production cuts across southern oil field clusters now seem inevitable.

Meanwhile, exports in Kurdistan have effectively stalled, and after HKN Energy’s Sarsang oil field was attacked by drones, the company announced suspension of operations, further worsening supply shortages in northern Iraq.

Additionally, according to a previous article by WallstreetCN, Abu Dhabi National Oil Company (Adnoc) and Kuwait Petroleum Company have both announced production cuts.

Among them, the UAE said it is "adjusting offshore production levels to meet storage needs," and Kuwait clearly attributed the cut to "Iran's threat to the safe passage of ships through the Strait of Hormuz."

Tanker Crisis: Available Capacity in the Persian Gulf Drops 78%

JPMorgan's storage matrix reveals striking differences in resilience among oil-producing countries:

Data clearly shows that Iraq is the weakest link, with storage buffer capacity supporting only about one week; Kuwait follows closely behind. Thanks to Saudi Arabia’s vast storage tank capacity (available reserves up to 229 million barrels) and some alternative export routes, it has relatively strong short-term resilience, but it cannot remain unaffected.

JPMorgan also emphasized in the report that the collapse of the tanker market during this crisis is shocking.

According to Kpler data, only 14 Very Large Crude Carriers (VLCCs) are operating in the Persian Gulf (3 linked to Iran), compared to 64 before the conflict—a drop of 78%.

JPMorgan warns: Starting this week, oil-producing countries will be forced to transfer crude oil to onshore storage tanks, which will rapidly accelerate tanks reaching full capacity and push the entire region to quickly enter the stage of mandatory production shutdowns.

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