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Oil prices spike after Gulf energy warning
Brent crude jumped 4.4% to $89.17 a barrel on Friday following Qatar's energy minister's warning that all Gulf oil and gas exporters may cease production within days due to escalating Middle East conflict.
Strait of Hormuz disruption threatens global supply
Saad al-Kaabi, Qatar's energy minister and CEO of QatarEnergy, told the Financial Times that if ships cannot pass through the Strait of Hormuz, oil prices could surge to $150 a barrel within two to three weeks. The strait, a critical chokepoint for global energy, typically handles about 20% of the world's daily oil supply.
Traffic through the narrow passage has nearly stopped since the US-Israel conflict with Iran erupted last weekend, leaving around 200 tankers stranded. Approximately 3,000 ships normally traverse the strait monthly.
Economic fallout feared as energy costs rise
Al-Kaabi warned that prolonged conflict could trigger global economic downturns, with higher energy prices, product shortages, and supply chain disruptions. Major economies like China, India, and Japan-top importers of crude via the strait-would face severe impacts.
Consumers in the UK and elsewhere are already experiencing fuel price hikes, though current increases remain below the 2022 peaks following Russia's invasion of Ukraine.
QatarEnergy halts LNG production amid attacks
QatarEnergy suspended LNG production this week after "military attacks" on its facilities. The company invoked force majeure, a legal clause excusing supply failures due to uncontrollable events. Al-Kaabi said resuming normal output could take "weeks to months," even if hostilities cease immediately.
While the UAE and Saudi Arabia have pipelines bypassing the strait, analysts caution that persistent threats to shipping will drive oil prices-and shipping costs-higher.
Global GDP growth at risk, minister warns
"If this war continues for a few weeks, GDP growth around the world will be impacted. Everybody's energy price is going to go higher. There will be shortages of some products and a chain reaction of factories that can't supply."
Saad al-Kaabi, Qatar's Energy Minister
Al-Kaabi predicted that all Gulf energy exporters would likely declare force majeure in the coming days if the conflict persists.
