Reports indicating that Kuwait started reducing oil production at certain fields due to exhausted storage capacity elevated the price of Brent crude to a peak of $91.89 on Friday – its highest level since April 2024 and an increase from approximately $72.50 prior to the outbreak of hostilities.
The cost of the global benchmark has risen by over 25% following the US and Israeli regime assault on Iran last weekend, representing its most significant weekly advance since the week ending April 3, 2020.
Fears are escalating regarding a wider storage shortage in the Middle East that might compel major oil producers to cease extraction.
According to Kpler consultants, storage sites in Saudi Arabia and the United Arab Emirates may hit capacity limits in about 20 days, possibly leading to additional halts.
Such measures are viewed as a final option for producers, given that the expensive reactivation process could last weeks, adding more strain to markets.
Concerns have intensified due to statements from Qatar’s energy minister, who forecasted that prolonged conflict would cause all Persian Gulf energy exporters to stop production within weeks, driving oil to $150 per barrel.
Saad al-Kaabi told the Financial Times that even if the war ended immediately it would take “weeks to months” for the Arab state of the Persian Gulf to resume its liquified natural gas exports.
The nation supplies roughly 20% of worldwide LNG exports.
Britain depends on Qatar for around 2% of its overall gas supplies, yet UK gas market prices climbed to three-year peaks this week amid worries that Europe might have to offer higher rates to vie with Asian purchasers for gas shipments if supplies fail to restart promptly.
Iran’s Islamic Revolution Guards Corps have vowed to “set ablaze” any Western tanker trying to navigate the strait of Hormuz, which serves as a critical passage for about one-fifth of global oil and liquefied natural gas.
According to Lloyd’s List, at least nine ships have faced attacks in the Persian Gulf since the US and the Israeli regime initiated strikes on Iran on February 28.
Markets have shown skepticism toward the Trump administration’s efforts to ease tensions by providing insurance and military protection for tankers choosing to traverse the narrow channel, as noted by Aaron Hill, chief market analyst at FP Markets.
Lloyd’s List estimates that at least 600 vessels are currently in the Persian Gulf, including 15 LNG carriers and 195 oil tankers.
Meanwhile, elevated gas market levels have stoked inflation worries, adversely affecting UK government bond prices and positioning yields on five- and 10-year bonds for their largest weekly surge since former Prime Minister Liz Truss’s “mini-budget” in September 2022.
Expectations for a UK interest rate reduction this month have diminished over the week; money markets now assign only a 15% probability, compared to 80% last week.
In a related development, eurozone government bond prices declined this week, setting yields on course for their most substantial weekly gain since March last year.
Money markets are now nearly completely anticipating an interest rate increase from the European Central Bank by year’s end.
Separately, stock markets in Asia-Pacific nations, which depend on energy imports from the Persian Gulf area, experienced their poorest week since the Covid-19 pandemic began six years ago.
In the UK, the FTSE 100 index dropped by more than 5%, its worst performance since April 2025 when Donald Trump unveiled extensive global tariffs.
The pan-European Stoxx 600 index also declined by over 5% during the week.
Airline shares endured a difficult period.
IAG, the owner of British Airways, decreased by more than 12%, while budget carrier Wizz Air shed about a fifth of its value after releasing a profit alert on Wednesday and estimating that the Middle East crisis might reduce its earnings by €50m (£43m).
While the US dollar gained strength since the Iranian assaults started, the price of gold dropped by around 3.5% over the week to under $5,100 per ounce.