09/03/2026 07:43 AST
Rising oil prices are emerging as an inflation and growth shock for the US and the global economy as Gulf producers cut output, declare force majeure, and warn that storage constraints could trigger wider shut-ins.
Kuwait said it had started reducing crude production and declared force majeure, while Iraq has already cut about 1.5 million barrels per day and warned reductions could exceed 3 million bpd if export routes remain blocked.
Qatar has halted liquefied natural gas liquefaction and declared force majeure on exports, while Abu Dhabi National Oil Co. said it is actively managing offshore output as storage pressures build.
Asian refiners and petrochemical producers have begun cutting runs and declaring force majeure as Middle East feedstock supplies are disrupted, Reuters reported.
The immediate result is a sharper pass-through of energy costs to consumers and industry.
A note from JPMorgan Chase said "supply disruptions in the Gulf are accelerating faster than expected as storage constraints begin to force upstream shut-ins across the region." Brent crude opened March 6 near $83 a barrel and quickly rose above $94, with the bank estimating about 2.5 million barrels a day of shut-ins after seven days of conflict, although reported disruptions currently appear closer to 2 million barrels a day. It said more than 4 million barrels a day of production may need to be curtailed by March 13.
Goldman Sachs said in a global economics report that "the main economic impact for most countries is that the recent rise in oil prices to around $80/bbl will boost inflation and slow growth," estimating that oil near current levels would add 0.2 percentage point to global headline inflation and shave 0.1 point off global growth. A temporary move to $100 a barrel would lift the inflation hit to 0.7 point and deepen the growth drag to 0.4 point.
For the US, the shock is milder than for oil-importing economies but still material. Goldman Sachs said the effect on US core inflation should remain relatively limited compared with Europe and emerging markets because the country relies more heavily on domestic energy supply, although households are already seeing higher fuel costs.
Reuters reported that US gasoline prices have risen more than 10 percent in a week, while AAA said the national average for regular gasoline climbed nearly 27 cents week on week to $3.25 a gallon as crude prices advanced.
Higher fuel costs threaten to squeeze consumer spending, raise freight and airline expenses, and complicate the path for the Federal Reserve if headline inflation remains sticky.
Outside the US, the impact could be greater as many economies are more exposed to imported oil and gas.
Goldman Sachs said the biggest headline inflation effects would likely be felt across parts of Central and Eastern Europe and Asia, while Europe and Asia also face added pressure from gas markets after the shutdown of Qatar's LNG production, which the bank said affects 19 percent of global LNG supply.
The bank raised its April 2026 TTF gas price forecast to ?55 ($64) per megawatt-hour from ?36, warning that a prolonged disruption could recreate conditions similar to the 2022 European energy crisis.
The supply shock is also being amplified by logistics. The Strait of Hormuz, which normally handles roughly 20 percent of global oil and LNG supply, has been blocked for days, leaving Gulf exporters with fewer available vessels and rapidly filling storage tanks.
That is pushing producers to reroute barrels where possible rather than maintain normal output.
Saudi crude is increasingly being redirected toward Yanbu on the Red Sea, while Egypt is seeking to position itself as part of that alternative corridor.
Asharq Bloomberg reported, citing two government officials, that Egypt has offered 10 crude and petroleum-product storage tanks for lease at Ain Sokhna and Ras Badran, targeting global oil traders and shippers with spare storage estimated at about 29 million barrels.
Goldman Sachs said global financial conditions had already tightened by 31 basis points since March 6 and estimated that, if sustained, this alone could trim global gross domestic product growth by another 0.3 percentage point over the next year.
The bank added that central banks have historically looked through many oil shocks, but a larger move in prices or stronger pass-through to consumer costs could delay rate cuts, particularly in emerging markets.
Arab News
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