Saudi Arabia and Kuwait, after a prolonged bilateral disagreement for five years on production of oil from two major oilfields in shared neutral zone, have agreed to resume production. Both parties have signed the Memorandum of Understanding (MoU) for resuming oil production in the divided zone,
One from Khafi Offshore oil field and the other from being Wafra Onshore oil field. Both parties have agreed to demarcate land and maritime borders in the neutral zone. Production from the conflicted fields was 500,000 bpd five years back. Prince Abdulaziz bin Salman has announced that the Khafji offshore oil field would produce about 320,000 bpd of oil by the third quarter of FY2021. However, as the deal comes in response to spiking oil prices in the international market, resuming oil production by these Arab countries is unlikely to alter OPEC’s commitment on production cuts next month.