Iran War Chokes Oil Supply, Prices Soar

More oil tankers are diverting toward the Red Sea, with Saudi Arabia increasing crude loadings at Yanbu, but other producers face dwindling storage capacity. The near-halt of traffic through the Strait of Hormuz, which handles a fifth of the world’s oil supplies, has caused storage tanks across the region to top out.

Drone and missile attacks have targeted refineries in Saudi Arabia, Kuwait, and Bahrain, prompting several to cut capacity. Iraq has shut its biggest oil fields, and Kuwait has cut production, according to the Wall Street Journal.

Qatar told the Financial Times that a complete halt in energy shipments from the region is certain if hostilities persist. Giovanni Staunovo, a commodity analyst at UBS Group AG, stated that a prolonged shutdown of the waterway will force output cuts by more producers.

JPMorgan Chase & Co. analysts identified Kuwait as highly vulnerable to shut-ins after Iraq.

Iran fired missiles and drones across the Persian Gulf, threatening escalated attacks. Goldman Sachs Group Inc.

flagged the risk of oil topping $100 a barrel if disruption extends. Bahrain’s 90-year-old refinery was hit but continued running.

Saudi Arabia’s largest refinery is shut, Kuwait’s biggest has slashed capacity, and Qatar has shuttered refining and LNG operations. China’s government has told its top oil refiners to suspend diesel and gasoline exports due to crude delivery disruptions.

In the US, gasoline pump prices have advanced to the highest level under President Donald Trump, posing a challenge for midterm elections. The US Treasury Department has eased curbs on India’s ability to buy Russian oil.