Gulf Conflict Sends Oil Prices Soaring Amid Disrupted Exports

The ongoing conflict in the Gulf region is severely restricting oil and LNG exports through the Strait of Hormuz, according to Wood Mackenzie. Iran has expanded its operations by enlisting Houthi proxies in Yemen to disrupt Saudi Arabia's crude exports passing through the Bab el-Mandeb Strait.

This has caused a precarious state for oil and LNG markets, with up to 12 million barrels per day of liquids and 86 million tonnes of LNG production shut in. Global oil stocks remain low despite some replenishment after a Memorandum of Understanding between the US and Iran was signed.

The conflict is also causing upward pressure on energy prices, with Brent futures returning to previous peaks of $120 per barrel seen in March and April. The economic outlook is deteriorating as high energy prices push the global economy into a shallow recession in the second half of 2026.