New Delhi: A sudden loss of Gulf oil exports could drive global crude prices sharply higher in the coming weeks, with analysts warning that Brent may need to climb to around $150/bbl to force enough demand reduction to stabilize the market.
Market analysis from Wood Mackenzie suggests the disruption represents one of the most severe supply shocks the oil market has ever faced. The consultancy estimates that around 15-million barrels a day of exports from the Gulf have effectively disappeared from international markets, out of total regional liquids production of roughly 20-million barrels a day.
The scale of the outage is unprecedented for modern oil markets and has already tightened global supply chains. Early in the week, competition for the remaining cargoes pushed prices above $100/bbl as importers scrambled to secure alternatives.
On how much higher could Brent go, Wood Mackenzie Chairman & Chief Analyst Simon Flowers, says, “Certainly over $150/bbl in the coming weeks as it did in 2022 (in real terms), when Russia invaded Ukraine. However, supply volumes at risk this time are dimensionally bigger – and real. In our view, $200/bbl is not outside the realms of possibility in 2026.”
Europe and Asia are expected to bear the brunt of the disruption. Gulf refineries accounted for around 60% of Europe’s jet fuel imports and about 30% of its diesel supply in 2025, volumes that have now effectively been removed from the market. Asian buyers — particularly refiners in China and India — have also been racing to secure replacement cargoes, lifting prices for crude grades from West Africa and Latin America. With both regions competing for limited non-Gulf supply, upward pressure on prices has intensified across global markets.
Strategic Reserves Inadequate
Strategic petroleum reserves could soften the immediate impact but are unlikely to fully offset the supply loss.
Members of the International Energy Agency (IEA) hold emergency stocks equivalent to about 90 days of imports, yet sustained large-scale releases are rare. Moreover, IEA member countries account for less than half of global oil demand, limiting the overall impact such releases could have.
Historical precedent also suggests limited effectiveness. During the crisis following the Russian invasion of Ukraine in 2022, coordinated stock releases failed to prevent oil prices from climbing to around $125/bbl. The current disruption, analysts note, is considerably larger.
Alternative production sources are also unlikely to fill the gap quickly. Higher prices could encourage US shale operators to accelerate drilling and postpone maintenance, but output growth from the Lower 48 states would likely add only a few hundred thousand barrels per day over the next three to six months — far short of the 15-million-barrel-a-day deficit.
As a result, the market may ultimately rebalance through demand destruction rather than additional supply. “Global oil demand of 105-million barrels a day will still have to fall to balance the market and in our view, that will require Brent to push up at least to $150/bbl in the coming weeks,” says Flowers.
According to the consultancy, demand would decline through several channels if prices reach those levels. Industrial consumers could scale back fuel use, transport systems might shift toward less oil-intensive options, economic activity could slow and consumers may reduce discretionary travel.
The disruption is linked to escalating tensions in the Middle East and the closure of the Strait of Hormuz, a critical artery for global oil and LNG shipments. The shutdown has halted exports and forced Gulf producers to suspend LNG production, further tightening global energy markets.
“When the conflict ends, cranking up the supply chain won't be swift. Product barrels in storage at refineries or in port might be moved on vessels quite quickly. But if wells are shut-in for a prolonged period, restarting production to full output could take weeks or even longer,” says Flowers.
Although crude briefly surged to nearly $120/bbl earlier this week, prices later slipped below the $100/bbl level after comments from US President Donald Trump suggested the conflict in Iran could end sooner than expected.
However, analysts caution that markets will require concrete signs of de-escalation — particularly around shipping safety in the Strait of Hormuz — before easing concerns about prolonged supply disruption.
“Much will depend on how long the war lasts, how long the Strait of Hormuz remains closed and if the US Navy can ensure safe passage of vessels by escorting shipping. Supply volumes at risk this time are dimensionally bigger – and real. In our view, $200/bbl is not outside the realms of possibility in 2026,” says Flowers.