Oil Prices Surge Amid Gulf Production Concerns
Oil prices have surged following a warning from Qatar's energy minister that all oil and gas exporters in the Gulf region may cease production within days.
Saad al-Kaabi told the Financial Times that the ongoing conflict in the Middle East—a region critical to global energy supplies and shipping routes—could "bring down the economies of the world."
On Friday, Brent crude oil prices climbed to $89.17 per barrel, marking a 4.4% increase from the close of trading on Thursday.
Kaabi indicated that if ships are unable to transit the Strait of Hormuz, oil prices could escalate significantly, potentially reaching $150 a barrel within two to three weeks.
Approximately one-fifth of the world's daily oil supply is transported through the Strait of Hormuz, but since the outbreak of the US-Israel conflict with Iran last weekend, traffic through this narrow passage has nearly ceased.
Impact of Prolonged Conflict on Global Economy
Kaabi emphasized the broader economic consequences, stating to the newspaper:
"If this war continues for a few weeks, GDP growth around the world will be impacted.
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."
Consumers in countries such as the UK are already experiencing higher fuel prices, alongside rising gas prices.
While concerns exist that the current crisis could mirror the economic effects of Russia's invasion of Ukraine, the increases in oil and gas prices have not yet reached the peaks observed in 2022.
Qatar's Role and Production Halt
Qatar is a significant producer and exporter of oil and Liquified Natural Gas (LNG). This week, QatarEnergy announced it had halted LNG production following "military attacks" on its facilities.
Kaabi noted that even if hostilities cease immediately, it would require "weeks to months" to restore normal production levels.
Additionally, QatarEnergy declared "force majeure," a contractual clause that exempts it from liability for failure to supply due to uncontrollable events. Kaabi expressed his belief that all other energy exporters in the region would likely have to declare similar measures within days if the conflict persists.
