What Happened: Kuwait and Saudi Arabia have agreed to restart oil production in disputed oil fields in the neutral zone between both countries, according to the speaker of Kuwait's National Assembly, Asharq Al-Awsat reported Oct. 21. Both countries are reportedly seeking to finalize the deal in the next 45 days.
Why It Matters: A territorial dispute between Kuwait and Saudi Arabia has halted oil production in the neutral zone after Riyadh unilaterally extended a concession agreement to Chevron without Kuwaiti approval, prompting the latter to limit access for workers to the Khafji and Wafra oil fields. Even if both sides finalize a deal, it could take multiple months for the Wafra field to resume production, while the Khafji field is expected to be able to come back online almost immediately.
Background: The oil fields have a combined output capacity of 500,000 barrels per day, but it remains unlikely that Kuwait and Saudi Arabia have an incentive to raise oil production due to persistently low oil prices. The two countries have made progress toward reaching a deal in the past, although several interim agreements have failed to materialize.
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