Brent and WTI prices pushed past US$115 a barrel on 9 March 2026. (Image source: GlobalData)

As Brent and WTI prices pushed past US$115 a barrel on 9 March 2026, the world was in for a major supply shock

“The latest price spike indicates that the market is rapidly transitioning from pricing in a logistics disruption to factoring in a potential supply shock. Initially, traders reacted to maritime risks in the Strait of Hormuz, which raised shipping costs and delayed cargoes. However, recent developments suggest that actual production and export volumes across key Gulf producers are now at risk, fundamentally tightening global supply expectations," said Jaison Davis, economic research analyst at GlobalData, an intelligence and productivity platform. 

He went on to explain how the sharp price rise exposed the market’s spare capacity buffer. "Even relatively small disruptions to Gulf production can trigger outsized price movements because the region accounts for a disproportionate share of globally traded crude," Davis said. 

“The current surge in prices also reflects the concentration risk within the global oil system. A large share of exports from Saudi Arabia, Iraq, Kuwait, and the UAE passes through the Strait of Hormuz, leaving global energy supply exposed to geopolitical disruptions in a single maritime corridor. Financial markets have already begun pricing in the broader macroeconomic consequences of the oil shock, including rising inflation expectations, currency volatility, and pressure on equity markets across energy-importing economies," he said.

Duration remains the most influential determining factor at this point. While prices may find balance if stability is restored in the Strait of Hormuz, it can easily lead to a structural supply deficit situation if there's no end in sight for the conflict.

“At the same time, should GCC states, along with Turkey, manage to influence the US and international diplomatic channels toward de-escalation, markets may begin to unwind some of the current geopolitical risk premiums. Tanker flows through the Strait of Hormuz could stabilise, insurance and freight costs could moderate, and production cuts could be reversed, gradually pushing oil prices closer to pre-crisis levels. Residual volatility would likely persist, but a credible ceasefire or mediation effort could alleviate worst-case supply fears and ease pressure on energy-importing economies.

"Nonetheless, oil markets will remain acutely sensitive to developments in the Gulf region. Pricing dynamics are increasingly shaped by security conditions and the resilience of export routes through the Strait of Hormuz. Even with short-term stabilisation in shipping, any lingering disruption to production, infrastructure, or tanker traffic risks sustaining elevated volatility, as well as renewed inflationary pressures for oil-importing countries,” said Davis. 

New developments have driven oil prices sharply higher

A wave of force majeure declarations has swept through the Middle East's energy sector this month as the ongoing US-Israel war with Iran disrupts production, shipping, and exports across the Gulf region, writes Sania Aziz. 

The declarations, which relieve companies from contractual obligations due to unforeseen events beyond their control, stem from Iranian retaliatory attacks on facilities, threats to maritime routes, and the near-total blockage of the Strait of Hormuz, which is a vital chokepoint for one-fifth of global oil supplies.

QatarEnergy, the world's largest liquefied natural gas (LNG) exporter, was among the first to act. On 4 March, the state-owned firm declared force majeure on LNG shipments after halting production at key facilities in Ras Laffan and Mesaieed following Iranian drone strikes.

The company cited attacks on its infrastructure and the inability to operate safely, with sources indicating restarts could take weeks or longer to avoid equipment damage.

Qatar supplies around 20% of global LNG, and the move has sent shockwaves through Asian and European markets reliant on these deliveries.

Kuwait Petroleum Corporation (KPC) followed suit on 7 March, declaring force majeure on crude oil and product exports while slashing output.

The decision was prompted by explicit Iranian threats to shipping safety in the Strait of Hormuz, ongoing regional attacks, and a severe shortage of available vessels in the Gulf.

KPC, a major naphtha and jet fuel supplier to Asia and Europe, cited these factors as making normal operations impossible.

Bahrain's Bapco Energies joined the list today, 9 March, announcing force majeure on group operations after an Iranian strike set its Sitra refinery ablaze, which is the kingdom's sole refining complex.

The company assured that domestic supplies remain secure under contingency plans, but exports and broader activities are severely impacted by the conflict.

Aluminium Bahrain (Alba), operator of one of the region's largest smelters, declared force majeure earlier in March on shipments.

Unlike others, Alba stressed that its facilities remain undamaged; the issue lies solely in halted shipping through the Strait of Hormuz, preventing outbound metal deliveries despite continued production.

The ripple effects extend beyond Gulf producers. China's Wanhua Chemical declared force majeure on for supplies to Middle East customers, blaming severe regional shipping disruptions.

These developments have driven oil prices sharply higher and raised fears of prolonged supply shortages.

Analysts warn that further escalations could prompt additional declarations from Saudi Arabia, the UAE, and others as storage fills and export routes remain blocked.

The situation remains fluid, with global energy markets on high alert.

AD Ports Group remains fully operational.

AD Ports Group has reported continuation of all operations across its clusters without any disruption given current regional developments

The Group has already taken precautionay measure with the activation of its crisis management and business continuity protocols, as it remains in constant coordination with the authorities concerned in the UAE to safeguard its workforce, partners and stakeholders.

All UAE ports and terminals managed and operated by the Group’s Ports Cluster, in addition to related services remain fully operational.

While inaccessibility of the Strait of Hormuz will affect vessel calls at Khalifa Port, services at the port will go on uninterrupted. Closure of the Strait of Homruz will be compensated by increased volumes from the Group's diversified global maritime network, as it shifts trading routes.

Across the Group’s Maritime & Shipping Cluster, the majority of its 122 shipping vessels including container, bulk, Ro-Ro, and multipurpose vessels are operating outside the Strait of Hormuz. Those currently within the Strait continue to operate intra-Gulf services. Overall, the impact on the Maritime & Shipping Cluster is expected to be limited. The Group’s Economic Cities & Free Zones and Logistics Clusters are likewise expected to experience limited impact.

Captain Mohamed Juma Al Shamisi, Managing Director and Group CEO of AD Ports Group, said: “Global trade has historically demonstrated resilience during periods of geopolitical tension. Through disciplined execution, operational excellence and proactive risk management, AD Ports Group remains well positioned to support supply chain stability and uphold its commitments to customers across its global network, in line with vision with our wise leadership.’’

Oil is now a question of access, geography and timing.

The oil market is no longer asking how much crude is being produced. It is asking who gets it, and when 

Over the past week, attention has focused on the number of strikes across ports, refineries, power plants and LNG facilities in the Gulf. Depending on assumptions, the direct loss of wellhead, pipeline and refinery liquids to market may already exceed 1 million barrels per day. That figure alone is significant. But it remains secondary to the larger question hanging over the Strait of Hormuz.

Even if Hormuz begins to flow again in something close to normal volumes, the region’s infrastructure is clearly vulnerable. The market is now being forced to price not just a temporary blockage, but the risk of ongoing disruption to oil and gas facilities. Each passing hour of uncertainty adds incremental supply chain strain, and Brent has begun to reflect that reality.

There are various scenarios between full closure and full normalisation. Even a return to 75% of normal transit would present a severe logistical challenge. Insurance costs, naval escorts and rerouting all reduce effective supply. Freight markets are already reacting accordingly. Prompt tanker rates are surging, sharply raising landed crude procurement costs.

In this environment, traditional pricing logic begins to break down. The landed price of crude grades becomes less relevant when freight cannot be reliably fixed and spot premiums are difficult to establish. The market shifts from price optimisation to access management.

The West is relatively long crude and less dependent on Arabian Gulf supply than the East. It also holds freight advantages. Asia, by contrast, is more exposed to Gulf flows. As a result, refining runs in Asia are more at risk than in Europe or the United States. That divergence is already appearing in product markets via East-West spreads.

Brent-Dubai spreads may widen further regardless of freight direction. There is effectively no competition for the marginal Western barrel into Asia if Gulf supplies are constrained. In that context, Dubai-linked pricing can tighten independently of freight economics, while Brent can move in ways that do not necessarily align with historical arbitrage logic.

Freight costs themselves are becoming a direct transmission mechanism. Aframax rates to Europe imply roughly $9 per barrel to move WTI into the Atlantic Basin, pushing prompt WTI-Brent spreads wider. VLCC routes to Asia are similarly expensive. Yet benchmark differentials do not always adjust cleanly to reflect this because physical flows are constrained by risk, not simply by economics.

The longer the stand-off persists, the more structural these shifts become. Refiners must make procurement decisions based on security of supply rather than margin optimisation. Strategic reserves in the US, Europe, China, Japan and South Korea provide buffers measured in months, but releasing stocks is a policy decision. Governments may choose to loan or auction volumes to smooth disruption, but those tools are not immediate substitutes for steady Gulf exports.

Infrastructure risk now extends beyond crude production. There are concerns around storage capacity, with reports suggesting some export terminals may face tank-top pressures if flows remain restricted. Ullage becomes part of the conversation. Even if Hormuz reopens, infrastructure security will remain in question for some time.

Products will increasingly act as the demand-adjustment valve. Refining margins may need to rise to justify higher crude procurement costs and ensure available barrels flow eastward. Natural gas pricing is already signalling potential substitution toward fuel oil and crude in power generation where possible.

For now, the market’s priority is evidence that Hormuz can move safely and consistently, including clarity on insurance and escort arrangements. Without that, prices will continue to reflect supply chain risk rather than just supply loss.

This is no longer simply a production story. It is a logistics and allocation story. In a fragmented and risk-sensitive market, oil does not disappear evenly. It becomes a question of access, geography and timing. And that is where volatility truly begins.

The writer of the article is Neil Crosby, AVP Oil Analytics at Sparta