Oil Prices Could Surge to $150 if Strait of Hormuz Blockage Persists
Energy Markets Face Major Disruption as Key Shipping Route Stalls
Oil markets could face dramatic price increases if the Strait of Hormuz continues to remain inaccessible to tanker traffic. Qatar’s Energy Minister Saad al-Kaabi warned that crude prices might surge to $150 per barrel within two to three weeks if shipments through the crucial maritime route do not resume.
Kuwait Begins Shutting In Oil Production
Shortly after al-Kaabi’s comments, reports emerged that Kuwait—one of the original members of OPEC—had started shutting in production at several oilfields. Sources familiar with the situation indicated that storage capacity has effectively been exhausted due to the ongoing disruption at the Strait of Hormuz.
Kuwait is reportedly considering additional production cuts and may reduce refining activity as well, potentially limiting operations to levels required for domestic consumption. Officials have not yet provided specific figures regarding how much production has already been taken offline.
Gulf Exporters May Declare Force Majeure
If the shipping lane remains effectively closed to tanker traffic, major oil and gas exporters across the Middle East may soon declare force majeure on their exports. According to al-Kaabi, who also serves as president and CEO of QatarEnergy, such declarations could occur within days if the disruption continues.
Force majeure declarations would allow energy producers to suspend delivery obligations due to circumstances beyond their control, further tightening global energy supply.
LNG Operations Halted at Major Qatari Facility
Earlier in the week, Qatar’s state energy company suspended LNG production at its Ras Laffan hub, the largest liquefied natural gas complex in the world. The halt followed a drone strike on the facility and the near-total stoppage of tanker traffic through the Strait of Hormuz.
After suspending operations, the company issued force majeure notices to buyers, signaling that shipments may be delayed or canceled due to the evolving security situation.
Tanker Traffic Drops to Near Zero
According to the Joint Maritime Information Center, vessel traffic through the Strait of Hormuz dropped dramatically from an average of 138 ships per day to only two vessels during the 24 hours leading up to Thursday. Neither of the ships that transited the strait during that period were oil tankers.
Several dozen tankers remain stranded near the chokepoint. Some vessels have reportedly been targeted in attacks, and insurers have withdrawn war-risk coverage for ships operating in the region. The loss of insurance has further halted maritime energy trade in one of the world’s most important oil-exporting corridors.
Although the U.S. president announced that the federal government would provide insurance coverage to support shipping operations, the measure has not yet restored tanker traffic.
Economic Consequences Could Follow
Al-Kaabi stated that exporters across the Gulf region are likely to declare force majeure if the situation persists. “Everybody that has not called for force majeure we expect will do so in the next few days that this continues. All exporters in the Gulf region will have to call force majeure,” he said.
He also warned that if the conflict continues for several weeks, the global economy could experience slower growth as energy supply disruptions ripple across markets.
Even if the war were to end immediately, al-Kaabi indicated that it could take weeks or even months for Qatar to restore normal shipping schedules and energy delivery cycles.
