Global oil markets are flashing red as fears of a Middle East storage crisis push the price of crude to levels unseen in nearly a year. Brent crude climbed as high as $91.89 per barrel this week, driven by the Iran conflict and reports that Kuwait had begun shutting down production at fields that had nowhere left to store their output. The surge of more than 25% since the war began represents the largest weekly gain in oil since the Covid-19 pandemic took hold in 2020.
The core concern gripping energy traders is not just the conflict itself, but the cascading storage crisis it has triggered. When oil cannot be sold or transported, it must be stored — and storage tanks across the Gulf are rapidly filling up. Consultants now estimate that Saudi Arabia and the UAE could exhaust their remaining storage capacity within 20 days, potentially forcing them to join Kuwait in cutting production.
For oil producers, shutting down a well is not a simple switch to flip. The process of restarting production after a shutdown is technically complex, expensive, and slow — sometimes taking weeks to complete. This means that any forced shutdown would not only reduce immediate supply but could keep that supply offline long after any resolution to the conflict, prolonging the price impact.
Qatar has warned that the situation is approaching a point of no return. The country’s energy minister said that continued hostilities could push all Gulf exporters to halt production within weeks, which he projected would send oil prices to $150 a barrel. Qatar itself has already suffered significant infrastructure damage from the conflict, with an Iranian drone strike disabling a major LNG terminal. The country supplies roughly a fifth of the world’s LNG, and its absence from the market is already being felt in European gas prices.
Financial markets have responded with alarm. Asia-Pacific stocks suffered their worst week since the Covid pandemic began, while European and UK indices dropped more than 5%. Bond yields soared, airline stocks cratered, and currency markets moved sharply. The prospect of sustained high energy prices has effectively ended near-term hopes for interest rate cuts in both the UK and Europe.
Storage Crisis Fears Push Oil Beyond $90, World Braces for Price Shock
