The oil market’s nightmare scenario came true last weekend. 

Now the race is on to deal with it. Dozens of oil tankers are hunkering down inside the Persian Gulf after attacks near the Strait of Hormuz. Crude oil prices have surged significantly this week amid geopolitical tensions, including disruptions in the Middle East. This has driven sharp gains, with benchmarks reaching multi-month highs. The Israel-US-Iran conflict engulfing most of the Persian Gulf has pushed $10 per barrel higher (OilPrice).

The rally follows escalation in regional conflicts, with analysts noting potential for further upside if disruptions persist (some forecasts mention risks toward $100+ in extreme scenarios). Oil production has been fully suspended at the Rumaila Oil Field near Basra City, Iraq’s largest and the world’s second-largest oil field, citing high capacity of storage tanks at southern ports due to the closure of the Strait of Hormuz.

Saudi Aramco’s Ras Tanura refining facility on fire after reportedly being struck by a drone believed to have been launched by the Houthis. It is the world’s largest oil refinery, producing over 550,000 barrels a day, and a major oil export hub. Reports indicate Iran has struck Saudi oil infrastructure, with strikes said to have affected the Aramco facility at Ras Tanura amid the wider regional escalation.

The Iran War has so far not led to major disruption in oil production, supply, despite the shipping risks in the Strait of Hormuz and Bab el-Mandeb. Everyone from Wall Street to the White House is pricing this as a military disruption. Four to eight weeks, bombs stop, oil flows, back to normal. That model works for military blockades, but not for what actually happened here.

‘Seven insurance firms in London filed paperwork. That’s what shut down one-fifth of the world’s oil supply. Between March 1 and March 2, seven of the twelve P&I clubs that collectively insure roughly 90% of the world’s commercial shipping issued 72-hour cancellation notices for war risk coverage in the Persian Gulf. Without P&I cover, no port will accept the vessel, no cargo owner will load it, no bank will finance the voyage, and no charterer will contract it. The ship is commercially dead. A military blockade ends when the military stands down. An actuarial blockade ends when the insurance market decides it has ended. Those are two completely different timelines,’ expert said.

Meanwhile production at Kazakhstan’s largest oilfield, Tengiz, collapsed by around 30% in early March from February’s average levels, two industry sources told Reuters on Tuesday, with exports choked at the CPC terminal at the Black Sea port of Novorossiysk. Tengiz, which accounts for 40% of Kazakhstan’s oil output, has been trying to recover from a vast outage following fires in electric power equipment on January 18. The sources said that output at the Chevron-led field fell on March 1 to 415,000 barrels per day from an average of 590,000 bpd in February.

Events are escalating with unprecedented speed across the Middle East. Drone strikes on Saudi Arabia’s largest refinery, strikes on the world’s largest liquefaction facility in Qatar, the bombing of several tankers, widespread insurance policy cancellations – all that would be usually scattered across several months in a normal year; however, in 2026, that’s just one day’s worth of action. With the Strait of Hormuz seeing no navigation for several days already, ICE Brent is up at $84 per barrel, and it could very well test the $90 per barrel if the pressure on Gulf producers increases, OilPrice said.  

/X, OilPrice/