Kuwait’s Supreme Petroleum Council (SPC) has canceled the contract for a new pipeline to deliver crude oil to the Al-Zour refinery, which is currently being built by state refiner KNPC in the Partitioned Neutral Zone between Kuwait and Saudi Arabia.

The cancelation marks the latest setback for the long-planned 615,000 b/d refinery project, for which construction contracts worth a combined KD3.95bn ($12.95bn) were only awarded in late 2015 after many years of political wrangling...