Disruptions in the Strait of Hormuz following US-Israeli strikes on Iran triggered sharp price movements across global energy markets, as fears of supply shortages intensified in one of the world’s most critical energy transit routes.
The disruption in the strait, through which roughly 20% of global oil and liquefied natural gas (LNG) trade flows, raised concerns about a severe tightening in global energy supply.
Market anxiety deepened further after comments from Qatar’s Energy Minister Saad bin Sherida al-Kaabi, who warned that Gulf producers could be forced to halt oil and gas output if regional tensions escalate.
- Brent climbs to highest level since October 2023
Oil prices surged as geopolitical tensions intensified.
On Feb. 27, Brent crude settled at $73 per barrel, up 2.8%, while West Texas Intermediate (WTI) rose 2.6% to $67.18.
After US and Israeli strikes on Iran on Feb. 28, accumulated geopolitical risk premiums were rapidly priced into markets at the start of the following week.
Brent crude ended the week beginning March 2 16.2% higher at $90.83 per barrel, marking its highest closing level since October 2023 and representing a 24.4% increase compared with pre-strike levels.
WTI crude climbed 24.6% to $88.89 per barrel, reaching its highest level in about 29 months and gaining around 32.3% compared with levels before the attacks.
- Gas and coal markets also rally
Natural gas prices in Europe also surged sharply.
At the Netherlands-based Title Transfer Facility (TTF), Europe’s most liquid gas trading hub, April futures closed at €31.96 per megawatt-hour on Feb. 27.
Prices ended the week starting March 2 19.9% higher at €53.38 per megawatt-hour, representing roughly a 70% increase compared with levels before the attacks.
Coal markets followed a similar trajectory.
Newcastle coal futures, the benchmark for Asian markets, closed at $116.90 per ton on Feb. 27 before rising 6.3% to $133.80 per ton by the end of the week beginning March 2, marking a gain of more than 10% compared with pre-strike levels.
- Around 19.5 million bpd of oil flows disrupted
According to analysts, the disruption in the Strait of Hormuz effectively halted about 15 million barrels per day (bpd) of crude oil and 4.5 million bpd of refined fuel flows from the Gulf.
The interruption represents roughly one-fifth of global daily oil consumption, creating a significant supply shock in oil markets.
With exports disrupted, crude has begun accumulating in onshore storage tanks and on tankers waiting at sea.
Iraq is estimated to have already shut in at least a quarter of its roughly 4.3 million bpd of production, as limited storage capacity restricts its ability to continue pumping.
While Saudi Arabia, the UAE and Kuwait possess some storage capacity, analysts say available space may be sufficient for only several days of continued production.
- Around 110 bcm of global LNG supply at risk
More than 112 billion cubic meters of LNG exports passed through the Strait of Hormuz last year, accounting for about 20% of global LNG trade.
With roughly 90% of shipments heading to Asian markets, the closure of the strait could leave global markets without around 110 billion cubic meters (bcm) of gas supply, analysts estimate.
Meanwhile, gas storage levels in the EU remain relatively low.
According to Gas Infrastructure Europe, EU underground gas storage facilities are currently 29.9% full, adding to concerns about the region’s energy security amid potential supply disruptions.
By Duygu Alhan
Anadolu Agency
energy@aa.com.tr