Oil prices have gathered all the ingredients for a perfect storm
A narrow waterway in the Persian Gulf has become the fulcrum upon which the global economy now tilts. The Iran-Israel war, entering its second week, has effectively closed the Strait of Hormuz to most shipping, severing the passage through which one-fifth of the world's daily oil supply flows. Brent crude surged past $115 a barrel on Monday — the sharpest spike since Russia's invasion of Ukraine — and the human cost is already being counted not only in geopolitical terms, but in lives lost at petrol stations in Pakistan and factories gone dark in Bangladesh. What unfolds next will test whether the world's most vulnerable nations can endure the weight of a conflict they did not choose.
- The Strait of Hormuz, carrying 15 million barrels of oil daily, is effectively closed — and the global economy is absorbing the shock in real time.
- Pakistan raised fuel prices by a historic 55 rupees per litre, yet the hike could not prevent deadly violence at petrol stations, where two people were killed in separate confrontations over fuel access.
- Bangladesh has shuttered universities early, darkened five of six fertiliser factories, and imposed strict daily fuel rations, as Qatar suspended LNG deliveries and supplies dwindled to critical levels.
- Gulf producers including Iraq, Kuwait, and the UAE are cutting output not by choice but by necessity — their storage tanks are full because there is nowhere to ship the oil.
- Qatar's energy minister warned that all Gulf exporters may invoke force majeure within days, and analysts caution that prices could reach $130–$150 a barrel if the disruption persists even a week or two longer.
Oil prices broke through $115 a barrel on Monday in the sharpest spike since Russia's invasion of Ukraine, as the ongoing US-Israeli war with Iran effectively sealed off the Strait of Hormuz — the narrow passage through which roughly one-fifth of the world's daily crude supply flows. Brent crude climbed to $115.31, nearly 24 percent above Friday's close, while West Texas Intermediate surged 28 percent.
The pain landed hardest in South Asia. Pakistan imposed its largest-ever single fuel price increase — 55 rupees per litre — pushing pump prices to 321 rupees. It was not enough to prevent violence: in Sialkot, a man opened fire at a petrol station after workers refused to fill his jerry cans, killing one and critically wounding two others. A second death occurred the same day in Karachi. Bangladesh, which imports roughly 95 percent of its fuel, faced an even more precarious situation after Qatar suspended LNG deliveries. Authorities closed universities early, shut down five of six fertiliser factories, and imposed strict daily rationing — two litres for motorcyclists, ten for private cars.
Larger economies moved to cushion the blow. Japan, which sources 95 percent of its crude from the Middle East, ordered its national oil reserve facility to prepare for an emergency release for the first time since 2022. India's oil minister sought to project calm, directing refineries to increase LPG production while insisting stocks remained sufficient.
The crisis was compounding itself regionally. Iraq, Kuwait, and the UAE began cutting production as storage filled with oil that could not be exported through the blocked strait. Iran's parliament speaker warned that Israeli strikes on Tehran's oil depots — which killed four people overnight — would deepen the economic damage. Qatar's energy minister told the Financial Times he expected Gulf producers to invoke force majeure within days.
Analysts warned that another one to two weeks of disruption could push prices toward $130–$150 a barrel — a threshold that observers described as potentially catastrophic. Pakistan and India were identified as the most exposed major emerging markets; Egypt and Turkey faced the greatest risk among non-Gulf nations. The question was no longer whether prices would rise further, but how long the strait would remain closed — and whether the world's most vulnerable economies could survive the wait.
Oil prices broke through $115 a barrel on Monday, marking the sharpest spike since Russia's invasion of Ukraine four years earlier. Brent crude climbed to $115.31, a jump of nearly a quarter from Friday's close, while West Texas Intermediate shot up 28 percent to $116.33. The driver was straightforward and brutal: the US-Israeli war with Iran, now in its second week, had effectively sealed off the Strait of Hormuz to most shipping traffic. That narrow waterway carries roughly 15 million barrels daily—about one-fifth of the world's oil supply—and its closure was sending shockwaves across the global economy.
The pain was most acute in South Asia, where countries depend almost entirely on imported fuel and had little buffer against sudden scarcity. In Pakistan, the government raised petrol prices by 55 rupees per litre on Friday, the largest single increase in the nation's history, pushing the pump price to 321 rupees. The move came after weeks of warnings that Pakistan's exposure to Hormuz-routed supplies was among the highest of any emerging market. Yet even that dramatic price hike could not prevent violence. On Saturday in Sialkot, a man opened fire at a petrol station after workers refused to fill his jerry cans, killing one worker and critically wounding two others. In Karachi the same day, another death occurred in a separate fuel-line confrontation.
Bangladesh, which must import roughly 95 percent of its fuel, faced an even more precarious situation. Qatar, a major supplier of liquefied natural gas, had suspended deliveries, forcing authorities to take emergency measures. Universities were ordered to close early for Eid holidays—a decision driven not by religious observance but by the need to shut down dormitories, classrooms, laboratories, and air conditioning systems that consumed vast amounts of electricity. Five of the country's six fertilizer factories had already gone dark. The government imposed daily fuel rationing: motorcyclists could buy no more than two litres, private cars ten litres. The Bangladesh Petroleum Corporation issued a public plea against hoarding, a sign of how thin supplies had become.
Larger economies with deeper reserves were also bracing for impact. Japan, which sources 95 percent of its crude from the Middle East with roughly 70 percent flowing through the Strait, instructed its national oil reserve storage facility to prepare for a possible release of emergency supplies—the first such order since 2022. The country holds 254 days of reserves, among the world's highest, but that cushion would erode quickly if the disruption persisted. India, importing more than 88 percent of its oil, sought to project calm. The oil minister announced the country held sufficient stocks and directed all liquefied petroleum gas refineries, both state and private, to ramp up production.
The regional impact was compounding the crisis. Iraq, Kuwait, and the United Arab Emirates had begun cutting their own oil production as storage tanks filled to capacity—they could pump the crude but could not ship it out through the blocked strait. Meanwhile, Iran's parliament speaker warned that Israeli strikes on Tehran's oil depots and a petroleum transfer terminal, which killed four people overnight, would cause the war's economic damage to spiral further. Qatar's energy minister, Saad al-Kaabi, delivered a stark warning to the Financial Times: if the conflict continued, he expected all Gulf energy producers to invoke force majeure within days, formally declaring themselves unable to meet export obligations.
Analysts were now gaming scenarios that could push prices far higher. Muyu Xu, a senior oil analyst at Kpler, told Reuters that if the Hormuz disruption persisted for another one to two weeks, prices could climb toward $130 to $150 a barrel. That threshold, industry observers cautioned, could prove catastrophic for the global economy. BMI, a unit of Fitch Solutions, identified Pakistan and India as the most vulnerable major emerging markets, citing their energy import dependence and heavy reliance on Hormuz routes. Egypt and Turkey faced the greatest risk among non-Gulf nations, given their fragile external positions and large energy subsidies that would become unsustainable if crude prices remained elevated.
What had begun as a regional conflict was now reshaping global energy markets in real time. The closure of a single shipping lane, the escalation of a single war, had triggered rationing in South Asia, violence at petrol pumps, emergency measures in universities and factories, and warnings of prices that could destabilize economies worldwide. The question now was not whether prices would rise further, but how long the Strait would remain closed—and whether the world's most vulnerable nations could survive the wait.
Citações Notáveis
Oil prices have now gathered all the ingredients for a perfect storm. If the disruption in the Strait of Hormuz persists for another one to two weeks, we could see prices move toward $130–150 a barrel.— Muyu Xu, senior oil analyst at Kpler
Everybody that has not called for force majeure we expect will do so in the next few days if this continues. All exporters in the Gulf region will have to call force majeure.— Saad al-Kaabi, energy minister of Qatar
A Conversa do Hearth Outra perspectiva sobre a história
Why did Pakistan's fuel price increase trigger violence at petrol stations? Wasn't the price hike meant to stabilize supply?
The price hike was a response to scarcity, not a solution to it. When fuel becomes scarce and expensive, people panic. They try to buy more than they can afford or more than the station can provide. The violence wasn't really about the price—it was about desperation. A man with a jerry can and no fuel for his motorcycle or his family's needs becomes a different person.
Bangladesh is rationing fuel by vehicle type. Why motorcyclists at two litres and cars at ten?
Motorcycles are the transport of the poor in Bangladesh. Two litres might get you through a day or two of essential trips. Cars belong to wealthier people who can absorb the restriction more easily. It's a rationing system built on class, whether intentional or not. But even that math is fragile—if the shortage deepens, even ten litres won't last long.
Japan has 254 days of emergency oil reserves. That sounds like a lot. Why is it preparing to release them now?
Because 254 days sounds like a lot until you do the math. Japan consumes roughly 3.5 million barrels a day. If the Strait stays closed and no new crude arrives, those reserves deplete in nine months. The government is signaling to markets that it's willing to act, but also that it's worried. If Japan—one of the world's richest nations with the highest reserves—is preparing emergency releases, imagine what's running through the minds of officials in Dhaka or Islamabad.
The energy minister of Qatar said all Gulf producers will call force majeure within days. What does that actually mean?
It means they're giving up. Force majeure is a legal declaration that circumstances beyond your control prevent you from meeting your obligations. Once you invoke it, you're no longer bound by contracts. You're not shipping, you're not selling, you're protecting what you have. When the world's largest energy producers start saying that, it signals that the disruption isn't temporary—it's structural. The market hears that and panics.
Why would Israeli strikes on Iranian oil depots make the war's economic damage spiral, as Iran's parliament speaker warned?
Because it closes the loop. Iran can't export through the Strait because it's a war zone. Now its own oil infrastructure is being destroyed. That means Iran loses revenue, loses leverage, and has less incentive to negotiate. The war deepens. Meanwhile, the global market loses not just transit capacity but actual production capacity. It's no longer just a shipping problem—it's a supply problem.