Iran war pushes oil price above $90 threatening rise in global inflation | Oil
The Iran conflict has sent the price of oil above $90 a barrel, its highest weekly gains since the Covid-19 outbreak six years ago, and threatens a new rise in global inflation.
News that Kuwait had begun cutting oil production at some fields because it ran out of storage space sent the cost of a barrel of Brent crude up to $91.89 at one point on Friday. This is the highest level since April 2024 and was around $72.50 just before the war began.
The price of the international benchmark has risen more than 25% since last weekend’s US-Israeli attack on Iran; This was the biggest weekly increase since the week to 3 April 2020.
Fears are now growing about a wider storage crisis in the Middle East that could force the world’s biggest oil producers to halt oil production.
Holding facilities in Saudi Arabia and the United Arab Emirates could reach their limits within 20 days, potentially leading to further closures, according to consultants at Kpler. This is considered a last resort for manufacturers as the costly restart process could take weeks and put further pressure on markets.
Qatar’s Minister of Energy further increased concerns by predicting that if the war continues unabated, all energy exporters in the Gulf will stop production within weeks and oil will rise to 150 dollars per barrel.
Saad al-Kaabi told the Financial Times that even if the war ended immediately, it would be “weeks to months” before the Gulf state could resume exports of liquefied natural gas after an Iranian drone strike damaged a key terminal. The country accounts for approximately 20% of global LNG exports.
Britain relies on Qatar for just 2 per cent of its total gas supplies, but prices in the UK gas market rose to three-year highs this week on fears that Europe could be forced to pay a premium to compete with Asian buyers for gas cargoes if deliveries do not resume soon.
Iran’s Islamic Revolutionary Guard Corps has threatened to “set fire” to any Western tanker trying to pass through the strait, which provides a vital trade route for about a fifth of the world’s oil and liquefied natural gas. At least nine ships have been attacked in the Gulf since the United States and Israel began their first attacks against Iran on Saturday, February 28. Lloyd’s List.
The market is unconvinced by the Trump administration’s attempt to calm nerves by offering insurance and military escorts to tankers that choose to pass through the narrow waterway, according to Aaron Hill, chief market analyst at FP Markets. According to Lloyd’s List, there are estimated to be at least 600 ships in the Gulf, including 15 liquefied natural gas carriers and 195 oil tankers.
Gas market rallies fanned inflation fears, dealing a blow to UK government bond prices and putting yields on five- and 10-year bonds (the debt interest rate) on track for the biggest one-week jump since then-prime minister Liz Truss’s “mini-budget” in September 2022.
Hopes of interest rate cuts in the UK this month have faded throughout the week; money markets now see this as only a 15% chance; Last week’s rate was 80%.
Eurozone government bond prices have also fallen this week, pushing yields towards their biggest weekly rise since March last year. Money markets are now almost entirely pricing in the interest rate hike that the European Central Bank will make by the end of this year.
On the other hand, stock markets in Asia-Pacific countries that are dependent on energy imports from the Gulf region experienced their worst week since the beginning of the Covid-19 epidemic six years ago. The UK’s FTSE 100 share index fell more than 5 percent, its worst week since April 2025, when Donald Trump announced sweeping global tariffs. The pan-European Stoxx 600 index also fell more than 5% for the week.
Airline stocks have had a tumultuous week. British Airways parent IAG fell more than 12%, while low-cost carrier Wizz Air lost nearly a fifth of its value after issuing a profit warning on Wednesday and predicting the Middle East crisis could wipe 50 million euros from its profits.
While the U.S. dollar has strengthened since the Iranian attacks began, the gold price has fallen nearly 3.5% on the week to below $5,100 per ounce.
