08/06/2026 06:06 AST
With the end of May 2026, the second month of the current fiscal year 2026/2027 came to a close. The average price of a Kuwaiti oil barrel for the month of May stood at about $119.8, which is higher by about $62.8 per barrel, ie, by about 110.2 percent, compared to the new assumed price estimated in the current budget of $57 per barrel.
The previous fiscal year 2025/2026, which ended at the end of last March, had achieved an average price of about $72.2 for the Kuwaiti oil barrel. The average barrel price for May 2026 is higher by about 66.0 percent than the average barrel price for the previous fiscal year, and higher by about $29.3 per barrel than the break-even price for the current budget of $90.5, according to the Ministry of Finance's estimates. However, due to the closure of the Strait of Hormuz, there is an almost complete disconnect between the figures mentioned and the reality of the public budget's financial position. At best, Kuwait will not, for a period of time estimated in months, be able to sell more than a negligible share of its oil production.
The war in our region began on February 28. Because the figures for gross domestic product, the external balances, and the financial balance, or the public budget surplus and deficit, all depend in an exceptional way on oil export revenues, relying on assumption and estimation to measure the damage inflicted upon them has become almost impossible.
Because our section concerns the financial performance for May 2026, a month of an almost complete closure of the Strait of Hormuz, the sole outlet for Kuwaiti oil exports, we no longer know the volume, and consequently the value, of any Kuwaiti oil exports, if any exist. The Kuwaiti Ministry of Finance used to issue what is called the "Monthly Follow-up Report on the State Financial Administration Accounts for the Revenues and Expenditures of the Public Budget," and its availability eliminated the need for estimation and guesswork; however, it stopped issuing it some time ago for a reason unknown to us.
Because it is the third month of the Strait of Hormuz closure and the second of the current fiscal year, and because most sources state that Kuwait no longer produces more than its need for local consumption, within about 528 thousand barrels per day, and because oil products sold locally at subsidized prices may not cover their cost, we will assume that oil revenues for the month of May are around zero. Non-oil revenues collected for the months of April and May may amount to about KD 583 million, and accordingly the budget deficit estimate for the two months stands at about KD 1.550 billion.
In summary, we remain at our estimate of a high probability that the war will stop during the current month of June, as the pressures on its two direct parties, ie, the United States of America and Iran, have become harsh, and the severity of the repercussions of its continuation does not spare the entire world; it is therefore likely that an agreement will be reached to open the Strait of Hormuz within the next few weeks.
According to a statement by the Managing Director of the Global Marketing Sector at Kuwait Petroleum Corporation, Kuwait will be able to reach 70 percent of its pre-war production level within 6-8 weeks from the date of the opening of the Strait of Hormuz, ie, before the beginning of the last quarter of the year if the war stops according to our estimate. Because the level of certainty is at its lowest, we will not dare to adopt firm estimates of the budget's probable deficit, and we tend, in an optimistic scenario, to think that Kuwait will lose all of its oil revenues estimated at the conservative budget price of $57 per barrel until the end of next July, or about KD 3.100 billion, then we will see what happens to the production level and the price level.
Kuwait Times
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