Analysts at JP Morgan have issued a stark warning that the potential closure of the Strait of Hormuz could have severe repercussions for oil production in Iraq and Kuwait. The bank indicated that if the closure persists over the coming days, both countries could face a significant reduction in oil supplies, totaling 3.3 million barrels per day by the eighth day of the ongoing conflict in the Middle East. With approximately 20% of the world's oil and liquefied natural gas flows traversing this critical waterway, its closure poses a global concern for energy supply stability.

In their analysis, JP Morgan suggested that Iraq and Kuwait each have a limited window to continue their oil exports, which rely heavily on the Strait. Specifically, Iraq could be compelled to halt its oil exports within approximately three days, while Kuwait might be able to continue for about 14 days before needing to make cuts. This situation underlines the vulnerability of oil supply chains and highlights the importance of the Strait of Hormuz as a lifeline for regional economies heavily dependent on oil revenues.

Further complicating the situation, JP Morgan projects that if the closure continues beyond the initial days, the scale of oil supply reduction could escalate dramatically. Projections indicate that by the 15th day, supply cuts could reach 3.8 million barrels per day, and by the 18th day, this figure could rise to 4.7 million barrels per day. Such reductions would not only impact the economies of Iraq and Kuwait but could also reverberate through global oil markets, leading to increased prices and further instability in energy supplies.