Oil drops as Hormuz tanker traffic rises and Kuwait pumps 2 million barrels daily

Price movements and Gulf supply flows

Crude oil prices declined for a second consecutive session on Tuesday, October 6, as Gulf producers expanded crude shipments through the Strait of Hormuz. West Texas Intermediate for November delivery fell on the NYMEX to $88.76 per barrel, a decline between 0.75% and 0.8% during Tuesday morning trading. Brent crude on the ICE exchange dropped to $99.78 per barrel, shedding between 0.5% and 0.54% after earlier morning quotes had reached $100.88 per barrel. The losses followed a 2% drop on Monday, which occurred after Saudi Arabia lowered official crude selling prices for Asian buyers to accommodate expanding Persian Gulf output. Despite two days of declines, crude benchmarks remain substantially higher than at the start of the year, with WTI up 54.4% and Brent up 63.8% since January 2026.

Tanker traffic and Kuwaiti production recovery

Marine transit through the Strait of Hormuz is expanding as merchant vessels resume operations despite ongoing security threats from Tehran. Kuwait is currently extracting approximately 2 million barrels of crude oil per day, representing 75% of its pre-conflict capacity of 2.6 million barrels per day recorded before late February 2026. Production in Kuwait had dropped below 1 million barrels per day during the opening weeks of the conflict when Iranian forces blocked navigation across the chokepoint. Kuwaiti domestic refineries remain operational, but transport restrictions through the strait have constrained shipments of refined petroleum products and drawn strategic fuel reserves down to critical levels. Sheikh Nawaf Al-Sabah, chief executive officer of Kuwait Petroleum Corp., noted that shipping operators are accepting the transit risks because global supply chains depend entirely on the passage.

While Tehran continues to threaten shipping in Hormuz, an increasing number of tankers still risk transit through this route.

Infrastructure limits and Iraqi fleet procurement

Kuwait Petroleum Corp. leadership pointed out that construction of bypass infrastructure has not replaced the passage. Sheikh Nawaf Al-Sabah stated that alternative pipelines and fuel storage facilities cannot replicate the volume handled by the maritime route.

Everything people do, every pipeline they build, every fuel storage facility, all of that will still not replace the crucial importance of the Strait of Hormuz for international trade.

In Baghdad, the Iraqi Ministry of Oil and the state-owned Iraqi Oil Tankers Co. are pursuing measures to expand national shipping capacity through the strait. The state enterprise expects to charter at least one oil tanker in the coming days and is drafting a commercial tender to charter additional vessels. Concurrently, Iraqi oil officials are working to secure state funding to purchase oil tankers directly, seeking to support national export quotas and retain transport profits currently paid to foreign charterers.

Fleet arrivals and military escalation near Bab al-Mandab

At least two oil tankers are scheduled to arrive in Iraq over the coming days to load export crude. While rising Gulf flows have exerted downward pressure on international crude prices, geopolitical developments near the Red Sea threaten to curb further price drops. Saudi-backed Yemeni government forces captured strategic positions near the Bab al-Mandab strait on Monday, following the formal declaration of a government offensive against rebel forces on Sunday. Renewed hostilities near Bab al-Mandab present operational hazards for marine transit along the southern Red Sea corridor. Energy markets continue tracking both Persian Gulf shipping volumes and southern Red Sea military movements for potential disruptions to physical crude deliveries.