Oil Could Hit $150 Within Weeks as Hormuz Closure Chokes Gulf Exports

Qatar’s Energy Minister Saad al-Kaabi told Financial Times that oil prices could surge to $150 per barrel within two to three weeks if the Strait of Hormuz remains effectively closed to tanker traffic, as storage capacity fills and production shutdowns accelerate across the Gulf.

Vessel traffic through the strait has collapsed from an average of 138 ships per day to just two in the 24 hours to Thursday, with neither being tankers, according to the Joint Maritime Information Center. The waterway normally handles around 20 million barrels per day, representing roughly 20% of global seaborne oil trade, primarily from Saudi Arabia, the UAE, Iraq, Kuwait, and Qatar.

The disruption follows joint U.S.-Israeli military strikes on Iran on February 28, 2026, which killed Supreme Leader Ali Khamenei. Iran responded with retaliatory missile and drone attacks while the IRGC issued warnings prohibiting vessel passage through the strait. Insurers have pulled war risk coverage, contributing to a paralysis of energy trade even though the strait remains technically open.

Brent crude futures have surged 20% this week, while West Texas Intermediate jumped 25%. On Friday, Brent traded over 3% higher at $89 per barrel while WTI rose over 5% to $86, with both benchmarks trading at their highest levels since April 2024, according to OMM Communications.

Kuwait Shuts Production as Storage Fills

Kuwait faces complete dependency on Hormuz transit with no alternative pipeline infrastructure, creating the most severe vulnerability among regional producers and forcing immediate production shutdown. Iraq and Kuwait have roughly three and 14 days, respectively, before they would be forced to halt crude exports, according to JP Morgan analysis.

In a prolonged closure, losses could escalate to 3.8 million barrels per day around day 15 and 4.7 million barrels per day by day 18. Iraq will be forced to cut its oil production by more than 3 million barrels per day in a few days if oil tankers cannot move freely through the strait, two Iraqi oil officials told Reuters.

Arab producers around the Persian Gulf collectively have just over 100 million barrels of storage capacity left, or about a third of their total. But effective levels will be lower in practice, and operational usage rarely exceeds 80% of nameplate levels, according to Kayrros analyst Antoine Halff quoted by World Oil.

Force Majeure Wave Expected

Qatar halted its liquefied natural gas production on Monday as Iran continued to strike Gulf countries. The country’s LNG production is equivalent to about 20% of global supply and plays a major role in balancing both Asian and European markets’ demand, according to The Express Tribune. Only six or seven of Qatar’s 128 LNG carriers were currently available to load cargo, al-Kaabi noted.

Al-Kaabi also expects gas prices to rise to $40 per million British thermal units, nearly four times pre-war levels. One-fifth of the global supply of LNG passes through the waterway, while 30% of Europe’s supply of jet fuel originates from or transits via the strait, reported Al Jazeera.

Alternative Routes Insufficient

Saudi Arabia and the UAE have some infrastructure in place that can bypass the Strait of Hormuz. The pipelines do not typically operate at full capacity, and about 2.6 million barrels per day of capacity could be available to bypass the strait, according to the U.S. Energy Information Administration.

Saudi Aramco operates the 5 million barrel per day East-West crude oil pipeline, which runs from the Abqaiq oil processing center near the Persian Gulf to the Yanbu port on the Red Sea. However, this capacity is insufficient to offset the loss of Hormuz transit for the entire region. Kuwait operates without significant alternative export infrastructure, creating complete dependence on Hormuz routing. Geographic positioning and limited pipeline investments leave Kuwait uniquely vulnerable, noted analysis from Discovery Alert.

Iran didn’t need a naval blockade to bring traffic to a halt. It didn’t use underwater mines or rely on anti-ship missiles, but focused on selectively deploying a much cheaper technology. All Iran had to do was several drone strikes in the vicinity of the Strait of Hormuz, and insurers and shipping companies decided it was unsafe to traverse the waterway, Helima Croft of RBC Capital Markets told NPR.

Asian Markets Most Exposed

India faces the largest combined exposure in the region. More than half of its LNG imports are Gulf-linked, and a significant share is Brent-indexed, so a Hormuz-driven crude spike would simultaneously lift oil import costs and LNG contract prices, creating a dual physical and financial shock, according to CNBC reporting.

China is the world’s largest crude oil importer and purchases more than 80% of Iranian oil. Around 30% of its LNG imports come from Qatar and the UAE, and roughly 40% of its oil imports pass through Hormuz, according to Kpler and UBP estimates.

Trump Insurance Pledge Faces Skepticism

Trump said the U.S. Development Finance Corporation will provide political risk insurance and guarantees for maritime trade through the Gulf. If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, the president announced on social media.

But there’s a reason insurers balked at covering ships through the strait. Even if you were to offer a subsidized price, it’s a war zone. Certain boats are going to sink, and DFC is going to have to pay out the insurance, warned William Henagan of the Council on Foreign Relations in NPR coverage.

The benchmark freight rate for Very Large Crude Carriers used to ship 2 million barrels from the Middle East to China hit an all-time high of $423,736 per day on Monday, marking an increase of more than 94% from Friday’s close, according to LSEG data reported by CNBC.

What to Watch

The next 72 hours are critical. If tanker traffic does not resume, Iraq will exhaust storage capacity and begin massive production cuts by the weekend. Kuwait follows within two weeks. Monitor whether Trump’s insurance scheme attracts any commercial shippers—so far, none have publicly committed.

Watch OPEC+ response. The group holds approximately 3.5 million barrels per day of spare capacity, concentrated in Saudi Arabia and the UAE, but a significant portion of Gulf spare capacity cannot reach global markets if the Strait of Hormuz remains inaccessible, noted Kpler analysis.

The $150 price target assumes current conditions persist for 2-3 weeks. If diplomatic progress emerges or naval escorts prove effective, markets will reprice quickly. But if Iranian attacks escalate or storage-driven shutdowns accelerate, JP Morgan’s $120-150 scenario becomes the floor, not the ceiling.

Correction: A truncated version of this article was previously published and has been corrected.