This was the week the energy crisis got very real. Oil surging past $90 a barrel — a more than 25% weekly gain, the biggest since the Covid-19 pandemic — has transformed what was an abstract geopolitical risk into a concrete and immediate economic threat for businesses, governments, and consumers across the world. The Iran conflict, which began barely days ago, has already reshaped the global economic landscape in ways that will take months to fully understand.
The physical reality of the crisis is stark. The Strait of Hormuz, through which a fifth of the world’s oil and gas normally flows, has been closed to normal commercial traffic by Iran’s vessel attacks and threats. Gulf oil storage is filling rapidly as production continues but shipping has stopped, with Kuwait already cutting output and Saudi Arabia and UAE expected to face the same crunch within 20 days. Qatar’s LNG terminal has been damaged, cutting roughly 20% of global LNG supply.
These are not abstract financial market concerns — they are physical realities with direct and immediate consequences. When oil cannot be moved, it accumulates. When storage fills, production must stop. When production stops and restart takes weeks, supply is constrained long after any political resolution. When LNG supplies are cut, European and Asian gas buyers compete in a smaller market and prices rise. These dynamics are already playing out.
Qatar’s energy minister has translated these physical realities into a price forecast: $150 a barrel if the conflict continues and all Gulf exporters are forced to halt production. This week’s experience — in which oil rose more than 25% in days — provides an uncomfortable illustration of how quickly that price target could be reached under the right (or wrong) circumstances.
Financial markets have already priced in a dramatically changed world. Stock markets have fallen sharply globally. Bond yields have surged. Rate cut hopes have collapsed. Airlines have warned of massive losses. Economists are revising their forecasts. For all the drama in financial markets this week, the real impact — on fuel bills, on food prices, on economic growth — will take months to fully materialise. But this was the week that impact became inevitable.