A week that began with oil at $72.50 ended with it threatening $92 a barrel — a shattering of market complacency that has left investors, policymakers, and businesses scrambling to reassess their assumptions. The Iran conflict has delivered a more than 25% weekly surge in Brent crude — the biggest since the early Covid-19 pandemic — and exposed the global economy’s continuing vulnerability to Middle East energy shocks.
The week’s most alarming development came from Kuwait, whose announcement of production cuts at storage-full fields confirmed what energy analysts had feared: the conflict is not just disrupting shipping but is creating a physical storage crisis that could force multiple Gulf producers to halt output. Energy consultants have set a 20-day deadline for Saudi Arabia and the UAE, after which their storage facilities could be exhausted.
The Strait of Hormuz remains the critical chokepoint at the heart of the crisis. Iran’s threats to attack western tankers have effectively closed the waterway to normal commercial traffic, with nine vessels having already been struck since hostilities began. Around 600 ships, including 195 oil tankers, are estimated to be in the Gulf — unable to move freely and adding to the storage backlog as oil continues to be produced but cannot be transported.
Qatar’s energy minister delivered the week’s most alarming market message. If the conflict continues, he warned, all Gulf exporters would halt production within weeks, and oil would reach $150 a barrel. Qatar itself is already dealing with the aftermath of an Iranian drone strike on a key LNG terminal, with exports expected to be offline for weeks or months. European gas prices have hit three-year highs as a result.
The market’s response to a week of shattering news has been severe and broad-based. Stocks fell sharply across Asia, Europe, and the UK. Bond yields surged to levels last seen in major economic crises. Rate cut expectations were abandoned. Airlines issued profit warnings. Gold, surprisingly, fell. And economists everywhere began the uncomfortable work of revising their inflation forecasts upward in the face of an energy shock that shows no sign of easing.
