BY Daniel Bampoe
Global oil prices have climbed to their highest level in more than two years as escalating tensions in the Middle East threaten energy production and critical shipping routes that supply a significant portion of the world’s oil and gas.
The sharp increase in prices follows a warning by Qatar’s Energy Minister, Saad al-Kaabi, who said the ongoing conflict involving Iran and its regional adversaries could soon force Gulf energy exporters to halt production if the situation persists.
Speaking in an interview with the Financial Times, al-Kaabi cautioned that the conflict could trigger serious economic consequences worldwide, describing the situation as one that could “bring down the economies of the world” if it continues for several weeks.
The warning immediately rattled global markets, pushing Brent crude oil prices up by more than nine percent on Friday to over $93 per barrel, the highest level recorded since autumn 2023.
Growing Concerns Over Global Economic Impact
Rising oil prices often ripple across the global economy, affecting transportation, manufacturing, heating costs, and the prices of food and imported goods. Economists warn that sustained increases in oil and gas prices could slow economic growth and reignite inflationary pressures in major economies such as the United Kingdom and the United States.
Both countries had recently seen inflation begin to ease after several years of price volatility triggered largely by supply disruptions following Russia’s invasion of Ukraine in 2022.
Al-Kaabi warned that oil prices could climb as high as $150 per barrel if the conflict involving Iran continues over the coming weeks.
“If this war continues for a few weeks, GDP growth around the world will be impacted,” he said. “Everybody’s energy price is going to go higher. There will be shortages of some products, and there will be a chain reaction of factories that can’t supply.”
Early Signs Already Emerging
In the United Kingdom, motorists are already beginning to feel the effects of rising energy costs. According to the RAC, petrol prices have increased by 3.7 pence per litre, while diesel prices have jumped 6 pence, reaching their highest level in 16 months.
The UK’s Competition and Markets Authority has said it is closely monitoring developments in fuel pricing at petrol stations to ensure consumers are not unfairly charged.
Household energy bills could also increase later this year. However, the impact may not be immediately felt as the UK’s energy regulator, Ofgem, has already set its price cap on household energy bills until July.
Despite the recent surge, current oil and gas prices remain below the peaks recorded in 2022 following the outbreak of the Russia-Ukraine war, which triggered one of the most severe global energy crises in recent history.
Qatar Halts LNG Production
The concerns intensified earlier this week after QatarEnergy, the state-owned energy company of Qatar, announced that it had suspended production of liquefied natural gas (LNG) following military attacks on some of its facilities.
The company invoked force majeure, a contractual clause that allows suppliers to suspend delivery obligations due to circumstances beyond their control.
Al-Kaabi, who also serves as chief executive of QatarEnergy, warned that if the conflict continues, other energy exporters in the Gulf region may soon be forced to take similar steps.
He added that even if hostilities were to end immediately, it could take weeks or even months before production levels return to normal.
Strategic Strait Of Hormuz Disrupted
A major concern for global energy markets is the disruption to traffic through the Strait of Hormuz, one of the world’s most critical oil shipping routes.
Approximately one-fifth of the world’s oil supply typically passes through the narrow waterway each day. However, shipping traffic has largely halted since the conflict between the United States, Israel and Iran escalated last weekend.
The closure or disruption of the strait could have far-reaching consequences, particularly for major oil-importing nations such as China, India and Japan, which depend heavily on crude supplies transported through the route.
Although the United Arab Emirates and Saudi Arabia operate alternative pipelines that bypass the strait, analysts say these routes cannot fully compensate for the volume normally shipped through the waterway.
