Global oil markets are braced for a turbulent start to the week, with crude prices forecast to surge and shipping at a standstill in a key maritime corridor, as a sharp escalation between Iran and a US-Israel alliance triggers fears of a full-blown regional energy crisis.
US crude oil is expected to jump by 9% when trading resumes, potentially pushing it above $73 a barrel to its highest level since June 2025, according to data from the broker IG. This dramatic rise comes despite a move by the OPEC+ cartel to increase production, underscoring the severity of the shock to global energy supplies centred on the Strait of Hormuz.
Effective closure of a critical chokepoint
The immediate catalyst for the market panic is the effective closure of the Strait of Hormuz, a narrow passage between Oman and Iran through which about a fifth of the world’s seaborne oil and liquefied natural gas flows daily. Iran’s Revolutionary Guards reportedly told ships that passage was “not allowed” on Saturday, prompting multiple shipping companies and charterers to independently suspend transits.
While a formal blockade has not been declared, the practical impact is severe. Approximately 170 containerships, with a combined capacity of around 450,000 TEU, are currently inside the strait facing restrictions on exiting. Major carriers including Hapag-Lloyd and CMA CGM have halted transits and are rerouting vessels away from the Suez Canal. The U.S. Navy has also issued a maritime warning zone across the Persian Gulf, stating it cannot guarantee the safety of commercial vessels.
“Closing the strait in full would be devastating for Iran’s own economy,” warned Tamsin Hunt, a senior analyst at the consultancy S-RM. However, the immediate action has already caused major disruption, with at least 150 tankers carrying crude, LNG and oil products reported to have dropped anchor in open waters beyond the strait.
OPEC+ scrambles to respond
In an emergency move to calm markets, OPEC+ nations agreed in principle on Sunday to raise oil output by more than initially planned. Eight members, including Saudi Arabia and the UAE, are set to increase production by 206,000 barrels per day in April, compared with original expectations of a 137,000-barrel rise, according to Reuters reports. Some sources suggest the group may even consider an increase of up to 548,000 barrels per day under certain conditions.
This marks a significant shift from the group’s previous production schedule. OPEC+ had been in the midst of a carefully managed plan to reverse voluntary output cuts of 2.2 million barrels per day over an 18-month period starting in April 2025, with pauses planned for seasonal demand drops. Saudi Arabia and the UAE have now reportedly begun increasing export capacities as part of emergency action plans. Despite this, analysts question whether the increase will be enough to offset the potential loss of shipments from the Gulf, should the strait remain blocked.
Analysts at Barclays said the oil price could reach $80 a barrel in the event of a “material supply disruption”. Royal Bank of Canada analysts noted that regional leaders had warned Washington about contagion risks, indicating that “$100-plus oil was a clear and present danger.”
Markets brace for impact
The financial fallout is expected to be widespread. In London, the FTSE 100—which hit a record high on Friday and had been nearing the 11,000-point mark—is forecast to fall by about 0.5% on Monday morning. The picture in the Gulf was already bleak on Sunday, with Saudi Arabia’s market losing 2.5%, though shares in the state oil giant Aramco rose 2.5% on the crude price forecast. Boursa Kuwait suspended all trading until further notice, citing the “exceptional circumstances” facing the country.
Global investors are predicted to flee to safe-haven assets. Gold, which has risen for four consecutive weeks, was up 2.25% to almost $5,400 an ounce on IG’s weekend markets, while silver traded 3.2% higher.
The conflict has also sharply driven up the cost of insuring ships navigating the troubled waters. Dylan Mortimer, the marine hull UK war leader at the risk consultancy Marsh, said attacks on shipping could have “major repercussions across war insurance rates.” He identified the primary risks as “vessel boarding and seizure by Iranian forces and the potential closure of the strait of Hormuz.”
Attacks and port disruptions
The tensions turned violent over the weekend. Oman’s state news agency reported that an oil tanker, the Palau-flagged ‘Skylight’, was attacked approximately five nautical miles north of Khasab Port, injuring four mariners from a crew of 20. Iran later confirmed it attacked the tanker for “defying orders” not to cross the strait.
Logistics hubs have also been affected. Ports giant DP World suspended operations at its flagship Jebel Ali port in Dubai—a facility handling 15.5 million containers annually—as a precautionary measure. A fire was reported at one of its berths, caused by debris from an intercepted drone. Facilities at the Port of Duqm in Oman were also targeted by drones. Mediterranean Shipping Company has stopped booking worldwide cargo into the Middle East until further notice.
Broader economic and geopolitical ramifications
The repercussions of a sustained price spike could ripple through the global economy. The AA warned that the disruption could combine with the UK Treasury’s upcoming reversal of a 5p-a-litre fuel duty cut to push pump prices higher from their current averages of 132.9p for petrol and 142.4p for diesel.
On a macroeconomic level, climate and commodities economist Hamad Hussain estimates that if crude oil prices rise to $100 per barrel and remain there, it could add 0.6-0.7% to global inflation by increasing fuel and factory costs.
The crisis has activated contingency plans in major consuming nations. India, which imports nearly 90% of its crude oil requirement—with over 40% coming from West Asia via the Strait of Hormuz—is now taking steps to safeguard its energy supplies.
The International Energy Agency stated it is actively monitoring events and their potential implications for global oil and gas markets and trade flows. IEA Director Fatih Birol noted that markets have been well-supplied to date and that he is in contact with ministers from major producers and IEA governments.
