The Strait of Hormuz must remain open

There is no way to keep the Strait of Hormuz closed. Nearly the entire continent of Asia relies entirely on the strait remaining free and open, as does Europe, albeit to a lesser extent, though it would also trigger an energy crisis there. In numerical terms, approximately 20.5 billion barrels of oil pass through the strait to the world, equivalent to 25% of global commercial maritime transport.

Any closure of the strait would cause an energy crisis, meaning a shortage in supplies of petroleum derivatives and gas, in addition to halting commercial traffic and causing fuel crises in some Asian countries that do not possess sufficient oil reserves.

However, some countries have begun using their oil reserves, which creates the quantities needed to replace them. Another challenge is finding alternatives or identifying countries to which they can turn to import from.

Which countries might these be? Russia could be one. However, it faces a refining capacity problem due to attacks on its refineries. It may also face its own energy crisis as winter approaches, which will begin in two weeks’ time. Moreover, it must address the shutdown of more than 20 refineries. It is certain that it cannot meet all of Europe’s demands.

Let us observe and follow what will happen in oil markets during the winter period, and how Russia and Europe will handle the crisis in petroleum derivatives.

The solution may lie in Gulf petroleum derivatives, provided the strait is fully reopened with freedom of navigation as it was previously. This will not take long, but the most important factor is keeping the strait free for global navigation.

Oil prices remain high, with the Brent index surpassing an average of $95 per barrel. Gulf oil indicators are trending toward $100 per barrel. But is there movement? Are there sales to capitalize on these rates to reduce the fiscal deficit, even if temporarily? We need $90 per barrel. However, anything above this rate will help alleviate the deficit... and contribute to increasing capital expenditure and relying on our oil revenues. It also allows for the possibility of increasing our crude oil production to higher levels, reaching 3 million barrels per day, whereas we are currently between 2.6 and 2.7 million barrels per day. This is especially relevant at current oil price levels, particularly for Kuwaiti crude, which is approaching $100 per barrel.

This rate will undoubtedly help reduce the fiscal deficit, which stands at approximately 7 billion dinars, or $23 billion. The other approach is, as much as possible, meaning not reducing capital expenditure, which would subsequently generate other financial returns, such as increasing foreign investments, or reducing local expenditure outside the infrastructure sector.

Currently, the most important step is to reduce expenditure as much as possible and achieve financial surpluses, reaching a balance between spending and preventing or minimizing the expected fiscal deficit, rather than borrowing, which would later negatively impact our positive global financial indicators. We do not want to experience negative consequences, as we still maintain the best financial indicators globally.

Our hope is to keep the strait secure with full freedom of navigation, so that the world does not remain outside the scope of Gulf oil.