The global energy market is facing intense pressure on Saturday (7/3), against the backdrop of developments in the Middle East, as oil prices recorded their largest increase in two years, following a warning from Qatar’s Energy Minister, Saad Al Kaabi, about a potential production halt across the entire Persian Gulf region. Specifically, speaking to the Financial Times, the Qatari official emphasized that the conflict in the Middle East — a region of pivotal importance for global energy supply and shipping routes — could “bring down the world’s economies.”
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Oil prices and the price threat
It should be noted that Brent crude prices surged more than 9% on Friday (6/3), exceeding $93 per barrel, a level representing the highest since autumn 2023, and standing just a “breath” away from $100. This surge is expected to directly impact the cost of vehicle fuels, heating, food, and imported goods. There are strong warnings that if prices remain at these levels, inflation will reignite in major economies such as the USA and the United Kingdom, where it had been on a downward trajectory.
Saad Al Kaabi estimated that prices could reach as high as $150 per barrel if the conflict with Iran continues in the coming weeks. Speaking characteristically to the “Financial Times,” he stated: “If this war continues for a few weeks, GDP growth worldwide will be affected. Energy prices for everyone will increase. There will be shortages of certain products and there will be a chain reaction of factories unable to supply the market.”
LNG production halt and closure of the Strait of Hormuz
The situation is further aggravated by the fact that QatarEnergy has already halted LNG production following military attacks on its facilities. The company declared force majeure, while Saad Al Kaabi, who is also its CEO, noted that even if the war ended immediately, it would take weeks or months for production to return to normal levels.
The problem is intensified by the closure of the Strait of Hormuz, through which one-fifth of global supply flows daily. Traffic has almost stopped since the beginning of the war between the USA and Israel against Iran. Analyst Jorge Leon from Rystad Energy told the BBC that the situation poses a “real danger to the global economy” and added: “I believe we are at the threshold of understanding whether this is a brief energy crisis or if we are at the beginning of a massive economic and energy crisis. If this lasts more than two weeks, the chances of very significant impacts on the energy system and macroeconomic prospects are much higher.”
However, despite the fact that Saudi Arabia and the UAE have pipelines for transporting energy outside the Strait of Hormuz, analysts warn that as long as the threat to ships remains, prices and freight costs will continue to rise. Finally, it’s worth noting that if oil prices exceed $100, it is considered certain that governments worldwide will proceed to release their strategic reserves, as happened after Russia’s invasion of Ukraine.
