The price of oil spiked to nearly $120 a barrel after Israel struck Iran’s energy infrastructure and Tehran named Mojtaba Khamenei as its new supreme leader. Brent crude briefly reached $119.50 before easing; by Tuesday oil traded below $90 but remained more than 20% higher than when the war began on February 28.
The 10-day-old conflict has raised fresh fears for energy markets by threatening infrastructure across the Middle East. Iran’s strikes on energy facilities, airports, hotels, residential areas and US military sites have drawn Gulf states into the fighting and prompted threats of further retaliation. Shipping through the Strait of Hormuz — a chokepoint carrying about one-fifth of the world’s oil — has been effectively halted, a worst-case scenario for global supplies.
With tankers stuck, Gulf producers are relying on storage and alternative export routes. Saudi Arabia and the UAE can reroute some flows via the Red Sea and the Gulf of Oman, but other Gulf producers depend mainly on limited storage. JP Morgan estimates Gulf nations collectively can store about 343 million barrels, while roughly 15 million barrels per day of crude and more than 4 million bpd of refined products normally transit Hormuz. JP Morgan calculated that, on the day the war began, Gulf states had an average buffer of around 22 days of storage.
Warnings have come quickly. Iran’s Islamic Revolutionary Guard Corps said Tehran would “determine the end of the war” and warned it would prevent “one litre of oil” from leaving the region if US and Israeli attacks continued. Rystad Energy warned Iraq’s remaining fields faced an “imminent, near-certain shutdown.” Iraq, with only six days of storage, has reportedly already exhausted stockpiles and cut output by roughly 1.5 million bpd.
Saudi Arabia had more storage capacity — JP Morgan put it at 66 days on February 28 — yet Rystad estimated Saudi Arabia’s effective runway before forced cuts at seven to nine days, given logistical limits and strikes. Saudi Aramco has been rerouting exports to the Red Sea port of Yanbu, and the UAE has shifted some exports through Fujairah, but these alternatives cover only about a third of the usual volume via Hormuz.
Reports cited by Bloomberg say Saudi Arabia has reduced output by up to 2.5 million bpd, the UAE by 500,000–800,000 bpd, Kuwait by about 500,000 bpd, and Iraq by around 2.9 million bpd. A full halt to Gulf exports would likely send prices far higher: Qatar’s energy minister warned crude could hit $150 a barrel if production stops. Saudi Aramco warned of “catastrophic consequences” if Hormuz disruptions persist. ING noted the longer the crisis endures, the more supply will be “shut-in,” and the IEA warned that prolonged disruptions could flip the market from a recent surplus into a deficit.
Restarting shut-in production can take days to weeks; a prolonged shutdown risks equipment damage and geological complications that could lengthen outages.
Damage to facilities has already occurred. On March 2 Iranian drones struck Ras Tanura, Saudi Aramco’s largest refinery and a major export terminal (about 550,000 bpd refining capacity), prompting a shutdown for assessment. Iran also hit Qatar’s Ras Laffan LNG complex; QatarEnergy halted operations and declared force majeure. Sporadic strikes have continued despite an apology from Iranian President Masoud Pezeshkian; attacks hit Bahrain’s Sitra island and the Al Ma’ameer refinery, and Saudi air defenses intercepted drones bound for the Shaybah oil field. While US President Donald Trump claimed the war would be over “very soon,” Iran launched further strikes on Kuwait, Bahrain and the UAE early Tuesday, and Saudi forces reported destroying additional drones.
Edited by Andreas Becker
Editor’s note: This article was first published on March 9, 2026 and updated on March 10 to reflect the latest developments.