Kuwait to export oil from joint Saudi Arabia fields after five-year dispute as demand spikes

Kuwait announced Friday it will export its first crude shipment from oilfields in a shared neutral zone with Saudi Arabia that had been shut for five years due to a dispute.

Oil Minister Khaled al-Fadhel said that around one million barrels will be loaded on Saturday and Sunday onboard a Kuwaiti tanker "whose final destination will be the Asian markets", according to the official Kuwait News Agency (KUNA).

Saudi Arabia and Kuwait signed an agreement in December to resume pumping at two major oilfields in the shared neutral zone that had been closed due to a disagreement between the neighbours.

The two fields were pumping some 500,000 barrels per day before production was halted, first at Khafji in October 2014 and then at Wafra seven months later.

Riyadh said at the time that the decision was due to environmental issues.

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The oil produced in the neutral zone in the border area is shared equally between the two nations.

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The announcement comes as Saudi Arabia ramps up supply amid a price war with Russia that has sent oil prices crashing to 18-year lows as demand slides amid the coronavirus pandemic.

Saudi-Russian ‘oil war’

Oil prices plunged again on Wednesday as a possible production deal between the US and Saudi Arabia was put on hold, according to news agencies.

Brent fell by 1.8 percent to $25.88, while U.S. West Texas Intermediate crude was down to $20.6, according to Reuters, despite a brief rise in prices on Tuesday.

An oversupply in the market has continued to hammer prices with Saudi Arabia and other OPEC members unable to reach an agreement on cutting oil production, on Tuesday.

US crude inventories went up by 10.5 million barrels last week, way above the 4 million barrels projected in forecasts.

It comes on the back of a "price war" between Russia and Saudi Arabia, over an alleged disagreement on production.

Sustained low prices though would likely see North American oil companies hit hardest.

Demand for oil across the world has also plummeted due to the coronavirus outbreak, which has seen hundreds of thousands infected and billions under lockdown.