By Kuwait’s crude production dropped by more than half on Sunday as thousands of its oil industry employees began an open-ended strike over government plans to cut wages. The country’s output fell to 1.1 million barrels a day, Kuwait Oil Co., the state-owned production company, said on its official Twitter account. The Organization of the Petroleum Exporting Countries member usually produces nearly 3 million barrels per day. Exports remain normal and production is “on the rise,” oil ministry spokesman Sheikh Talal al-Khaled said in a post on the Twitter account. Workers are protesting a proposal to cut wages and benefits for all public-sector employees, as the oil-dependent country considers measures to cushion the effect of falling prices on its budget. Kuwait has lagged other oil producers in the Persian Gulf in cutting spending while attempting to make up for a nearly 30% drop in oil prices last year amid a global glut. The strike comes as delegates from more than a dozen oil producing countries who gathered in Doha hoping to freeze crude output failed to clinch a deal, according to ministers leaving the meeting late Sunday. A Kuwaiti oil official said the strike could inadvertently benefit the oversupplied market. State-owned refiner Kuwait Petroleum Corp.’s output fell from 930,000 barrels a day Sunday to 520,000 barrels. Kuwait has made it a priority to ramp up production capacity and reach new markets, competing with regional rivals including Iran and the United Arab Emirates. All three refineries operated by the Kuwait National Production Company, the state’s sole refiner, are working at the maximum capacity allowed by an emergency plan, Chief Executive Mohammed al-Mutairi said in a statement. Domestic fuel needs will be met without interruption, he said. Kuwait’s cabinet ordered the Kuwait Petroleum Corporation, the parent company of its state-owned oil institutions, to substitute the striking workers and “to hold accountable all those who hindered vital utilities,” according to official news agency KUNA. —Summer Said and Benoit Faucon contributed to this article. Write to at @wsj.com
Kuwait has been forced to, hopefully only temporarily, reduce its oil output due a rare outbreak of industrial action by the public sector, revealing a backlash to fiscal reform measures triggered by low oil prices. Kuwait Oil Company is having to reduce its production to 1.1m barrels a day from its regular output of 3m barrels a day. Though the Government has dismissed the impact, stating it has at least 25 days' worth of stockpiles of petroleum by-products, it does highlight the growing resentment in the the Persian Gulf as cash-strapped nations try to rebalance their oil-dependent economies. To balance its budget, Kuwait needs the oil price to be $50 a barrel. This strike comes as OPEC failed to reach an agreement in Doha over freezing crude output, which caused oil prices to plunge today.