Oil Prices Soar as Middle East War Cuts Production
The ongoing war in the Middle East has sent oil and gas prices surging to their highest levels since 2022, forcing major producers to cut output due to disruptions in the Strait of Hormuz.
Brent crude rose by 11% to $103.14 a barrel, while West Texas Intermediate climbed 8.9% to $89.49 a barrel. The natural-gas market also rallied sharply, with the European benchmark TTF front-month contract increasing by 14% to 61.02 euros per megawatt-hour.
Kuwait has begun cutting production at some oil fields, joining Iraq and Qatar in reducing output. Storage facilities in Saudi Arabia and the UAE are filling rapidly, with both countries expected to soon reach capacity.
Analysts warn that even if the Strait of Hormuz reopens, it could take weeks for upstream production to ramp up, leading to further price increases. Group of Seven finance ministers will meet virtually to discuss releasing oil reserves to mitigate the supply crunch caused by the conflict.
Market experts caution that if shipping disruptions persist, crude prices could climb above $130 a barrel despite potential releases from strategic petroleum reserves.