US oil prices briefly rose above $116/bbl during early trading on Monday, 9 March, before retreating to around $100/bbl when US markets opened.
The drop followed confirmed reports that the Group of Seven (G7) countries were discussing a coordinated release of emergency oil reserves with the International Energy Agency (IEA) in response to the escalating situation in the Middle East. After the meeting, leaders from the G7 (which includes Canada, France, Germany, Italy, Japan, the UK, and the US) said they are prepared to act but have not yet approved a release of emergency reserves.
Although US prices eased, the move still marked the largest weekly increase in the history of WTI trading, rising from about $67/bbl on the day preceding the joint US and Israeli airstrikes in Iran on 28 February.
Brent futures followed a similar trajectory in early trading on 9 March, rising above $119/bbl before falling to around $101/bbl by early afternoon, London time.
At the center of the trading activity are concerns over the safety of crude tankers transiting the Strait of Hormuz. The IEA estimates that the passage accounts for about 25% of global seaborne oil trade, or nearly 20 million B/D.
The IEA also estimates that about 93% of Qatar’s liquefied natural gas (LNG) exports and 96% of those from the UAE pass through the strait, representing nearly 19% of global LNG trade.
Both Kuwait and Iraq have announced significant production reductions in response to the situation.
The Kuwait Petroleum Corporation said on social media that it was lowering crude oil output and refining activity due to “Iranian threats against safe passage of ships through the Strait of Hormuz.” Kuwait recorded an output of 2.6 million BOPD in January.
Reuters reported that Iraqi officials said production from Iran's southern oil fields had been reduced by about 70% after storage capacity was reached. A week earlier, reports indicated the country had already curtailed 1.5 million BOPD, equal to about 36% of the 4.1 million BOPD Iraq produced in January.
The Abu Dhabi National Oil Company (ADNOC) said it was managing output from its offshore facilities while onshore operations continued, according to a separate Reuters report. ADNOC has the option of bypassing the Strait of Hormuz through a pipeline that transports crude to the port of Fujairah on the Gulf of Oman.
Last week, QatarEnergy said it halted production of LNG and associated products due to attacks on its facilities.
To revive tanker traffic through the Strait of Hormuz, the Trump administration unveiled a $20 billion reinsurance plan that would cover war-related maritime losses. The Lloyd’s Market Association said last week that the majority of vessels it covers in the region remain insured, making the impact of the US reinsurance plan unclear.
Beyond the strait, reported Iranian attacks on oil and gas infrastructure in several Gulf Arab states have disrupted supplies and heightened concerns over possible damage to key producing assets.
Bahrain’s Bapco Energies declared force majeure on its operations following an attack on its main refinery complex, which processes up to 400,000 BOPD. Photos and videos shared on social media showed a column of thick black smoke rising from the facility on 9 March after reports of a drone strike at the site.
The Saudi Press Agency reported on 9 March that Saudi defense forces intercepted and destroyed four drones targeting the Shaybah oil field, which produces about 1 million BOPD.
Offshore drilling contractor Borr Drilling said in a press release that on 7 March one of its rigs “was impacted by an incident.” The company said it has since evacuated crews and suspended operations on three jack-up rigs—one in the UAE and two in Qatar. Borr added that it also operates one additional rig in Saudi Arabia.
Iranian oil facilities had largely been spared in the conflict until 8 March, when Israeli strikes targeted multiple fuel and oil storage sites along with a refinery near Tehran. Widely circulated videos showed large fires and plumes of smoke rising from the affected facilities.
Analysts around the world are warning of prolonged market impacts and the possibility of a supply shock as the conflict enters its second week and is showing no signs of easing.
“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,” Jaison Davis, an economic research analyst for GlobalData, said in a statement.
In a note issued 9 March, Rystad Energy said oil prices could climb back above $110/bbl if the conflict lasts 2 months, and approach $135/bbl should it persist for more than 4 months.
Prior to the outbreak of hostilities, the consultancy had forecast prices at around $60/bbl for the rest of 2026, supported by an estimated 2.6 million BOPD supply surplus, a scenario that has now largely disappeared from market expectations.
“The market is currently grappling with physical supply being choked off by drone strikes, while Middle Eastern producers are simultaneously hitting a critical point where they must shut in production simply because there is nowhere left to put the oil,” said Janiv Shah, vice president of oil markets for Rystad Energy.
