Kuwait Grants State-Owned Oil Company Greater Commercial Autonomy Amid Regional Turbulence

In a decisive bid to sharpen its national oil firm’s performance, Kuwait issued an Emiri decree on 24 June 2026 that amends the 1980 law that established the Kuwait Petroleum Corporation (KPC). Published in the Official Gazette, the decree removes KPC’s oversight by the state audit bureau and transfers several management powers from the Supreme Petroleum Council (SPC) to the corporation, allowing it to operate on a commercial basis.

KPC, which oversees Kuwait’s exploration, production, refining, marketing and transportation of hydrocarbons, will now prepare its budget using commercial budgeting practices and modern accounting principles. The change follows the 2025‑26 Middle East conflict that saw Iran close the Strait of Hormuz, disrupting crude exports from Kuwait and other Gulf producers.

"The decree aims to revise the legislative framework of KPC and amend certain provisions of its founding law to enable it to keep pace with changes and developments in the global oil industry, as well as to maximise oil revenues and maintain its leading regional and global position," the decree states.

According to Al‑Seyassah, an unnamed oil official said that oversight of KPC’s finances by the state audit bureau had delayed important investment decisions. The official added that the revised framework would allow KPC to diversify and expand its sources of income. "The Iran crisis has underscored the dramatic development in the oil market and the need for KPC to cope with such developments," the official said.

The decree also reduces the SPC’s management‑related powers. Responsibilities that are not directly related to setting Kuwait’s general oil policy—such as approving regulations governing the tendering, awarding and conclusion of contracts by KPC and its subsidiaries—are transferred to the corporation.

Kuwait’s Minister of Oil and Chairman of KPC, Tariq Al‑Roumi, said the amendment came more than 46 years after the original law was issued and would strengthen KPC’s ability to respond to rapid changes across the global oil industry. He added that the revised framework would support the corporation’s efforts to maintain its leading position and maximise Kuwait’s oil revenues.

"The amendments, which have now come into effect, reinforce the commercial nature of the corporation and its management according to modern commercial principles, which will enhance performance efficiency and strengthen the ability to achieve sustainable returns," Al‑Roumi said.

KPC is the umbrella company for Kuwait’s major oil and petrochemical entities, including Kuwait Oil Company, Kuwait National Petroleum Company, Petrochemicals Industries Company and Kuwait Petroleum International. The corporation accounts for about 7 % of global crude oil production and is a key contributor to Kuwait’s GDP.

The decree’s timing reflects the broader impact of the Strait of Hormuz closure. The strait carries roughly 20 million barrels of oil per day—about 20 % of world consumption—making any disruption a significant risk to global markets.

By granting KPC commercial autonomy, Kuwait seeks to streamline decision‑making, reduce bureaucratic delays and enable the company to invest more swiftly in exploration, production and diversification projects. The move also aligns with Kuwait’s long‑term goal of increasing production capacity to 4 million barrels per day by 2040.

The decree is not a step toward privatization. It simply removes the requirement for KPC to report to the public audit bureau and shifts certain regulatory functions from the SPC to the corporation, according to the Ministry of Oil.

Kuwait’s oil sector remains under the oversight of the SPC, which still sets the country’s overall oil policy and coordinates with the government on strategic issues. However, the new framework gives KPC greater operational flexibility while maintaining state control over the sector’s strategic direction.

The decree is expected to improve KPC’s competitiveness in global energy markets and enhance its ability to respond to market volatility, officials said. The changes will take effect immediately upon publication, and KPC will begin operating under the new commercial model from the start of the next fiscal year.

The decree marks a significant milestone in Kuwait’s efforts to modernise its state‑owned enterprises and adapt to a rapidly changing energy landscape.