The ongoing escalation of conflicts in the Middle East is causing the global energy market to experience the most severe shock in years.
According to CCTV News, on Friday, March 6, the military strikes by the United States and Israel against Iran entered their seventh day. Iran claims to be prepared for a long-term war and is developing new weapons.
The continued escalation of conflicts in the Middle East has driven Brent crude oil to rise by as much as 12% during trading, reaching $94.41 per barrel. WTI crude oil surged over 17% at one point, reaching $92.37 per barrel.
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NYMEX natural gas futures also rose, peaking at a 9% increase during the day, reaching $3.274 per million British thermal units.
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The commercial shipping issues in the Strait of Hormuz have become the core driving force behind this round of market changes. Citigroup estimates that disruptions in the Strait of Hormuz could lead to a global daily oil supply loss of 7 to 11 million barrels. The Qatari Minister of Energy warned that if shipping disruptions continue, oil prices could surge to $150 per barrel within two to three weeks.
<h2>Near-total blockade of Hormuz, supply gap sharply widening</h2>
The Strait of Hormuz is a key passage connecting the Persian Gulf to global markets, normally carrying about one-fifth of the world's oil flow, with an average daily transit of approximately 20 million barrels of crude oil and petroleum products last year.
Reports indicate that multiple maritime information centers have announced that commercial passage through the strait has &#34;nearly come to a complete standstill,&#34; due to safety threats, insurance constraints, operational uncertainties, and actual disruptions.
Reports also indicate that Kuwait has begun to cut production from some oil fields due to its crude oil storage capacity being exhausted, marking the latest sign of supply disruptions in the Middle East.
Meanwhile, Saudi Arabia has rerouted millions of barrels of crude oil to Red Sea ports to avoid risks in the Strait of Hormuz and has raised the prices of its main oil varieties for Asian buyers in April to the largest increase since August 2022.
As the situation escalates, oil-producing countries are being forced to respond urgently. Saudi Arabia has significantly raised the prices of its main oil varieties for Asian buyers in April, marking the largest increase since August 2022, and has rerouted millions of barrels of crude oil to Red Sea ports to avoid risks in the Strait of Hormuz.
In terms of near-term price spreads, the spread between the last two Brent crude oil contracts has expanded to a premium of $5.76 per barrel, compared to just 58 cents a month ago, indicating extreme tightness in the spot market supply.
In Asia, supply pressures have been transmitted to major consuming countries. Japanese refiners have applied to the government to use strategic oil reserves. Reports indicate that the Japanese government is assessing the possibility of utilizing these strategic reserves but has not yet taken any concrete action. Market participants speculate that if multiple countries coordinate to jointly release emergency stocks, it could maximize the effect of stabilizing the market.
<h2>Goldman Sachs warns of $100 oil price, European oil products see record increases</h2>
As the situation continues to deteriorate, Wall Street institutions have begun pricing for extreme scenarios. Samantha Dart, co-head of commodity research at Goldman Sachs, stated in a media interview:
<blockquote>
If the low flow status in the Strait of Hormuz continues for about five more weeks, it is possible for Brent oil prices to exceed $100 per barrel.
</blockquote>
However, Goldman Sachs' baseline scenario still predicts that transportation through the Strait will gradually recover, and expects the average price of Brent crude in the second quarter to fall back to $76 per barrel.
The Qatari Minister of Energy issued a stronger warning in an interview with the Financial Times, stating that if tankers and merchant ships continue to be unable to pass through the Strait of Hormuz, oil prices could rise to $150 per barrel within two to three weeks.
On Thursday, the retail price of gasoline at U.S. gas stations rose to $3.32 per gallon, the highest level since 2024. Low-sulfur diesel futures on the ICE European Futures Exchange have increased by over 50% this week, marking the largest single-week increase on record.
<h2>Qatar LNG facility shutdown, natural gas market under pressure</h2>
The liquefied natural gas market has also been directly impacted.
Earlier this week, Qatar shut down its liquefied natural gas export facility in Ras Laffan after suffering drone attacks from Iran; this facility is the largest LNG export center in the world.
According to ship tracking data compiled by Bloomberg and informed traders, at least two LNG carriers, Al Thumama and Mesaieed, which are long-term leased by Qatar Energy, are currently rented out to external markets and are located near the west coast of Africa.
Supply-side pressures continue to accumulate, leading the EU to possibly reconsider the ban on Russian gas imports.
Wall Street Journal mentioned that Norway's Minister of Energy, Terje Aasland, stated at a meeting in Oslo, Norway, on the 3rd, that the EU has consistently expressed its desire to reduce dependence on Russian oil and gas, but the events of the past three to four days have made the situation more difficult. Given the current geopolitical landscape, he believes that discussions on this matter will resume.
According to a previous report by Xinhua News Agency, on January 26 of this year, the 27 member states of the EU officially passed regulations to gradually ban the import of pipeline gas and liquefied natural gas from Russia

BOIL

The military strikes by the U.S. and Israel against Iran have continued for the seventh day, with commercial shipping in the Strait of Hormuz nearly coming to a standstill, severely impacting the global energy market. Brent crude oil surged over 12% to $94 during trading, while WTI skyrocketed by 17%. Qatar's LNG facilities were attacked and shut down, causing natural gas futures to rise by 9%. Goldman Sachs warned that if the blockade lasts for five weeks, oil prices could exceed $100, and the Qatari energy minister further warned that prices could surge to $150 within two to three weeks

- The ongoing conflict in the Middle East is causing severe disruptions in the global energy market, with Brent crude oil prices surging over 12% to $94.41 per barrel.  
- The situation has strained supply chains, particularly affecting the strategic Hormuz Strait, leading to warnings of possible oil prices exceeding $150 per barrel if shipping routes remain disrupted.  
- Additionally, Qatar's gas export facilities have been impacted, prompting discussions within the EU to reconsider their stance on importing Russian gas amid rising pressures in the LNG market.

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On the seventh day of the Middle East conflict, the Strait of Hormuz is "almost at a standstill," with U.S. oil soaring by 17% at one point and natural gas skyrocketing by 9%