The global oil market is heading into a new phase of disorder. Not a temporary spike, not a speculative tremor — but the mechanical consequences of war meeting the physical limits of infrastructure. Storage tanks are filling, tankers are idling, and the world’s most important maritime corridor has, for all practical purposes, stopped functioning. Nine days into the war with Iran, the Strait of Hormuz — the narrow passage through which roughly one-fifth of the world’s oil normally flows — has become almost unusable. Not formally closed, perhaps. But effectively paralysed. In energy markets, the difference is irrelevant. The consequences are beginning to cascade through the system.
The United Arab Emirates and Kuwait have already started cutting production as storage capacity nears saturation. Iraq, which before the conflict pumped roughly 4.3 million barrels per day, has seen output collapse to around 1.7–1.8 million barrels. Other producers may soon have no choice but to follow. The reason is brutally simple. Tankers are refusing to enter the Gulf. Without ships to load crude, oil begins accumulating in storage facilities. Once those facilities fill, production must stop. Energy markets, for all their financial sophistication, remain hostage to basic physical constraints. Saudi Arabia is attempting to bypass the crisis by redirecting record volumes of crude toward its Red Sea terminals. Shipments from those western ports have reached roughly 2.3 million barrels per day since the start of the month — about fifty per cent higher than the kingdom’s typical Red Sea exports over the past decade. Yet even this emergency redirection cannot compensate for the nearly six million barrels per day that normally leave Saudi ports in the Persian Gulf.
Markets are adjusting accordingly. Brent crude has already surged roughly thirty per cent in the past week, its largest jump in six years, bringing it within striking distance of the psychological threshold of one hundred dollars per barrel. Some regional benchmarks have already crossed it. Abu Dhabi’s Murban crude closed above $103 on Friday. Omani futures approached $107. Chinese crude contracts in Shanghai briefly traded near $109. For traders, the message is obvious. Each additional day of disruption increases the pressure. Meanwhile, the war itself shows no sign of slowing. Iran has vowed to resist the American and Israeli strikes that began on 28 February. Donald Trump responded over the weekend by suggesting that new categories of targets inside Iran may now be considered. The campaign, he wrote, will continue “until they capitulate or collapse completely.
Energy infrastructure across the region has already begun to feel the strain. Saudi Arabia intercepted drones targeting the Shaybah oil field, a facility capable of producing 1 million barrels per day. Strikes have also been reported in Bahrain and Qatar. In Tehran, explosions hit the Shahran refinery complex. But perhaps the most destabilising element remains the maritime blockade around Hormuz. Satellite tracking data suggests that only Iranian-linked tankers — and a small number of vessels claiming Chinese ownership — have dared to transit the strait in recent days. Washington is attempting to restore confidence through financial engineering. The United States has announced a maritime reinsurance programme covering up to $20 billion in potential losses for ships operating in the Gulf. Officials have also hinted at naval escorts and even possible intervention in oil futures markets if prices spiral further. India has been quietly granted access to Russian crude stored on floating storage and regasification units (FSRUs) in the region. Strategic reserves remain an option.
Yet for shipowners, the problem is not insurance. It is survival. Even generous financial guarantees cannot offset the risk of missile strikes or drone attacks against tankers and crews. Shipping executives are therefore asking for something far more concrete than financial backstops: full naval protection similar to Operation Prosperity Guardian in the Red Sea — or, preferably, the end of hostilities altogether. The United States Energy Secretary, Chris Wright, insists that the current price spike reflects little more than a temporary “fear premium”. In his view, the disruption could last weeks rather than months. Markets appear less convinced. For Asia, the consequences are immediate. Japan imports more than 90 per cent of its crude oil from the Middle East and is already considering tapping its strategic reserves. China has begun limiting fuel exports in order to preserve domestic supply. South Korea is reportedly evaluating oil price caps for the first time in 3 decades. Europe, meanwhile, faces a more subtle but equally severe shock. In northwest Europe, jet fuel prices have already reached a record $1,528 per tonne — equivalent to more than $190 per barrel. Half of the European Union’s jet fuel imports normally pass through Hormuz.
The energy system is revealing its fragility. According to ING’s baseline scenario, disruptions may last roughly 4 weeks — 2 weeks of near-total paralysis followed by 2 weeks of partial recovery. But the bank also models a darker scenario: a three-month shutdown of Gulf oil and liquefied natural gas exports. Under that scenario, prices would likely explode to historic levels during the second quarter. Energy markets, after years of relative calm, have rediscovered a truth they had begun to forget. Supply chains built on narrow maritime chokepoints are not resilient systems. They are pressure points waiting for a war.