Geopolitical tension
The weekend brought no relief. The global energy market closed Sunday and opened Monday with a stack of developments that, taken together, help explain why Brent crude is trading around $102 a barrel after hitting an intraday peak of $110.70 — its highest level since 2022.
For those following the week from Argentina, Monday begins with three variables that are reshaping the crisis map.
Kuwait declares force majeure as the domino effect accelerates
On Saturday, Kuwait Petroleum Corporation (KPC) announced a production cut and declared force majeure on its crude and refined products sales. The state company — which produced about 2.6 million barrels per day in February — cited three specific reasons: explicit Iranian threats against shipping through the Strait of Hormuz, direct attacks on Kuwaiti territory and the near disappearance of available tankers to load cargoes in the Arabian Gulf.
KPC said the cuts began with about 100,000 barrels per day on Saturday, and were expected to nearly triple on Sunday, with further reductions depending on storage levels.
In that context, Kuwait joins Qatar — which halted LNG production on March 2 and declared force majeure on March 4 — and Iraq, whose production collapse has become the most dramatic development of the past several days.
Iraq: from 4.3 million to 1.3 million barrels in days
Output from Iraq’s main southern oil fields has fallen about 70% since the start of the conflict.
Before the war, southern fields — including Rumaila, West Qurna 2 and Majnoon — were producing roughly 4.3 million barrels per day. By the end of the weekend, that figure had dropped to 1.3 million barrels per day, according to three industry sources.
The cause is not physical damage to the fields. It is a direct consequence of the blockade dynamic.
With no tankers loading at Basra, storage tanks have reached maximum capacity and production had to be halted to avoid operational damage to pipelines and pumping systems.
In the north, the situation is equally critical. Fields in Iraqi Kurdistan have shut down as a precaution, and exports through the Ceyhan pipeline to the Mediterranean — the only route that allowed Iraq to bypass Hormuz — have been suspended, cutting flows to European markets as well.
Crude exports account for more than 90% of Iraqi state revenue. If the shutdown extends for a month, the social and political impact on Baghdad will be unavoidable.
The Japanese variable: this week’s wildcard
On Sunday, another signal emerged that traders will be watching closely when Asian markets open Monday. Japan is considering a unilateral release of strategic petroleum reserves, without waiting for coordination with the United States or the International Energy Agency (IEA).
It is the world’s third-largest strategic stockpile. The Japanese government holds about 260 million barrels across ten storage sites, and also has joint storage agreements with Saudi Arabia, the United Arab Emirates and Kuwait totaling another 178 million barrels. In total, according to official data, Japan has access to roughly 440 million barrels, equivalent to 204 days of imports.
A unilateral move by Tokyo would set a precedent. Until now, releases of strategic reserves by major importing economies have typically been coordinated through the IEA or through U.S.-led agreements.
That Japan is weighing action on its own suggests domestic urgency is already outpacing diplomatic timelines — and could foreshadow similar moves by South Korea and India, both heavily exposed to supply disruptions from the Gulf.
If confirmed, a coordinated or cascading release of strategic reserves would be the first real signal of a potential ceiling for the current oil rally.
What it means for Vaca Muerta
Argentina is experiencing this shock from an unprecedented position. The country’s oil production reached a record 882,200 barrels per day in January, with the Vaca Muerta shale formation accounting for most of the year-over-year growth. With Brent at $110, every additional $10 per barrel translates into roughly $1.3 billion in additional annualized export revenue, according to estimates from consultancy Aleph Energy. Projections for Argentina’s 2026 energy trade balance — previously pointing to a $10 billion surplus — could fall short if the rally continues.
But there is a limit that price alone cannot solve. Argentina currently exports about 300,000 barrels per day, a figure that cannot grow significantly until the VMOS pipeline (Vaca Muerta Oil Sur) enters operation, expected by late 2026. The benefit is real and arrives through price. The benefit through volume is still waiting for infrastructure.
This week will show whether the market holds $110, whether Tokyo acts, and whether Saudi Arabia and the United Arab Emirates — next in line, according to analysts — join the production cuts.