11/03/2026 04:25 AST
Just one week after the outbreak of military confrontation involving the United States and Israel on one side and Iran on the other, global energy markets have entered a phase of severe volatility, marked by a sharp surge in oil prices. The price of crude oil jumped from around $60 per barrel to approximately $115 within just six days, reflecting not only fears of war but also growing concerns about disruptions to one of the world's most critical energy arteries: the Strait of Hormuz.
This development has revived memories of the major oil crises of the 1970s. However, it is unfolding in a far more interconnected global economy that is heavily dependent on energy, making the potential consequences even more significant.
The global oil market: Key figures
Global oil demand currently stands at roughly 102-103 million barrels per day, according to international energy estimates. Global supply, meanwhile, is hovering around 101-102 million barrels per day, meaning that the market was already operating with only a narrow surplus before the crisis erupted.
The Arabian Gulf region lies at the heart of the global energy equation. Collectively, Gulf countries produce more than 30 million barrels per day and export close to 20 million barrels per day to international markets. These volumes represent roughly one-third of global seaborne oil trade.
Within this context, Iran remains a significant player in the energy market. Its oil production ranges between 2.8 and 3.2 million barrels per day, with exports typically reaching 1.5 to 2 million barrels per day under normal conditions.
However, the real significance of the current crisis lies not only in Iranian production but also in Iran's strategic geography overlooking the Strait of Hormuz, the most critical oil transit route in the world.
The Strait of Hormuz: The world's energy lifeline
Between 18 and 20 million barrels of crude oil and condensates pass through the Strait of Hormuz every day - equivalent to roughly one-fifth of global oil consumption. The route also carries large volumes of liquefied natural gas, particularly from Qatar, one of the world's leading LNG exporters.
Any disruption to shipping through this narrow waterway would effectively interrupt a significant portion of oil exports from Saudi Arabia, the United Arab Emirates, Kuwait, Iraq, and Qatar, creating a massive gap in global supply.
If the strait were fully or partially closed, global markets could immediately lose 15 to 18 million barrels per day of supply, a scale of disruption rarely seen in the history of modern oil markets.
Why did prices rise so rapidly?
The surge in oil prices to around $115 per barrel within less than a week can be attributed to several interrelated factors.
The first factor is the partial halt of Iranian production and exports due to military developments and restrictions on maritime activity in the region.
The second factor is the sharp increase in geopolitical risk. Insurance premiums for oil tankers operating in the Gulf have soared, prompting some shipping companies to suspend or delay voyages.
The third factor involves financial market reactions. During major geopolitical crises, hedge funds and large institutional investors often rush to buy oil futures contracts as a hedge against uncertainty, accelerating price increases.
The fourth factor is the growing perception of instability in Gulf oil supplies, especially amid reports that some countries are temporarily reducing exports or redirecting crude into domestic strategic storage.
Kuwait's "force majeure" declaration and its impact
Kuwait's announcement of force majeure on certain oil sales contracts marks a critical development in global energy markets. Legally, force majeure allows a producer or exporter to suspend contractual obligations due to extraordinary circumstances such as war or natural disasters.
In oil markets, such a declaration signals that supply disruptions are no longer merely hypothetical but potentially imminent.
If other Gulf producers adopt similar measures, the global supply deficit could widen further, potentially removing 10 to 12 million barrels per day from the market.
A shortfall of this magnitude could push oil prices to levels not seen in decades.
Could oil reach $200 per barrel?
While $200 per barrel may appear to be an extreme scenario, many energy analysts believe it cannot be ruled out if the crisis escalates or drags on.
History provides several examples of dramatic price spikes during geopolitical upheavals. In 1973, oil prices quadrupled within months following the Arab oil embargo. In 2008, crude briefly reached nearly $147 per barrel before the global financial crisis.
Today, however, global energy demand is significantly larger, and the world economy is far more dependent on long supply chains and energy-intensive transportation systems.
If Gulf oil infrastructure were targeted or if supply disruptions persisted, prices could quickly climb to $150-$180 per barrel. A prolonged closure of the Strait of Hormuz could push prices toward $200 per barrel or beyond.
The countries most vulnerable to the oil shock
The economic impact of the crisis will vary across countries, but several major economies are particularly vulnerable.
China, the world's largest oil importer, relies heavily on Middle Eastern crude. Higher prices would increase manufacturing costs and potentially slow industrial output and economic growth.
Japan and South Korea depend on imports for the vast majority of their energy needs, with a large share of their oil shipments passing through the Strait of Hormuz. This makes them especially sensitive to any disruption in Gulf shipping routes.
The European Union could face a new wave of inflation, particularly in transportation and heavy industry, at a time when many European economies are still recovering from the energy crisis triggered by the war in Ukraine.
The United States, despite being the world's largest oil producer with output exceeding 13 million barrels per day, would still face rising fuel prices domestically, which could intensify inflationary pressures and strain economic growth.
Meanwhile, some oil-exporting countries outside the Gulf - such as Russia - might benefit financially from higher prices, although a slowdown in the global economy could ultimately reduce overall energy demand.
Possible scenarios for the weeks ahead
The near-term outlook for oil markets will depend largely on how the conflict evolves.
One scenario involves rapid containment of the crisis and the reopening of shipping lanes in the Gulf, which could allow prices to gradually fall back toward the $90-$100 range.
A second scenario involves prolonged tension without major escalation, in which case prices may remain elevated between $120 and $150 per barrel.
The most dangerous scenario would be a broader regional conflict leading to widespread disruption of Gulf oil exports, potentially triggering one of the largest energy shocks in modern history.
A new test for the global economy
What is unfolding in oil markets today represents more than a temporary spike in prices; it is a serious test of the global economy's resilience to another major energy shock.
If supply disruptions in the Gulf persist or the Strait of Hormuz remains closed for an extended period, the world could face an energy crisis comparable to - or even more severe than - the historic oil shocks of the past.
In such a scenario, the key question will not simply be how high oil prices can rise, but how long the global economy can withstand the combined pressures of soaring energy costs, inflation, and the growing risk of recession.
AFP
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