There Appears To Be No Ceiling For The Ongoing Surge In Oil Prices

Brent Surpasses $90 Amid Gulf Oil Disruptions

The price of Brent crude has soared past $90 per barrel as the closure of the Strait of Hormuz brings Gulf oil shipments to a standstill. With both Iraq and Kuwait initiating production cuts, concerns are mounting over the potential for even sharper price increases.

Market Update: March 6, 2026

Following a declaration from the US President that negotiations with Iran would only proceed under terms of “unconditional surrender,” oil prices have surged. The ongoing blockade of the Strait of Hormuz has halted all crude exports from the Persian Gulf, propelling ICE Brent above $90 for the first time since April 2024. With Iraq and Kuwait now scaling back output, the current rally in oil prices shows no sign of slowing.

Key Developments in Global Energy

• Temporary Approval for Indian Purchases of Russian Oil: The US Treasury has granted Indian refiners permission to increase Russian oil imports for one month, provided shipments were loaded before March 5 and arrive in India within 30 days. This move has pushed up prices for Russian crude.
• Insurance Crisis for Tankers in the Gulf: President Trump has suggested the US Navy could escort oil tankers through the Strait of Hormuz after insurers withdrew coverage for the region. Despite this, no crude has left the Gulf since March 1.
• Related: Why Trump Wants Magnets More Than Gold
• Freight Costs from the Middle East Hit Record Highs: Shipping rates for VLCCs from the Middle East to Northeast Asia have surged, reaching $16 per barrel—about 20% of the free-on-board value of any grade—due to the Hormuz closure.
• Japan Seeks Strategic Oil Release: Japanese refiners have urged their government to tap into strategic reserves, fearing shortages as Japan relies on the Middle East for 95% of its crude imports.
• Kuwait Follows Iraq in Output Reductions: After Iraq shut down its West Qurna-2 and Rumaila fields, Kuwait’s state oil company began cutting production at several sites as storage facilities near capacity, including the closure of the Mina Abdulla refinery.
• Qatar’s LNG Exports Delayed: Media reports indicate that QatarEnergy plans to keep its Ras Laffan liquefaction plant offline for at least two weeks, with full LNG production not expected to resume for another month, temporarily removing 20% of global LNG supply.
• Russian LNG Tanker Sinks in Mediterranean: The Arctic Metagaz, a vessel transporting LNG for Russia’s Novatek, sank in the Mediterranean following an alleged drone strike by Ukrainian forces launched from Libya.

Additional Headlines

• Hungary’s Oil Shortage Heightens European Strains: Hungarian oil company MOL filed a complaint with EU regulators against Croatian pipeline operator JANAF for refusing to transport Russian oil, as the region faces ongoing supply disruptions.
• Strikes Disrupt Saudi Refining: Saudi Aramco’s largest refinery at Ras Tanura was hit by a second drone attack this week, further impacting gasoline output after a temporary shutdown.
• Gulf Conflict Drives Up Aluminium Prices: Ongoing missile and drone attacks on Bahrain have forced Aluminium Bahrain, one of the world’s largest smelters, to halt exports, causing aluminium prices to jump 5% to $3,420 per metric ton.
• US Denies Treasury Oil Trading Plans: Amid speculation that the US Treasury might intervene in oil markets to counter rising prices, the Trump administration has rejected such proposals for now.
• Related: How China’s Rare Earth Ban Backfired into a U.S. Tech Breakthrough
• Sulphur Supply Risks for Global Mining: The ongoing US-Israel-Iran conflict threatens the supply of sulphur, vital for nickel, copper, and lithium mining. The Persian Gulf provides half of the world’s sulphur, and disruptions could impact global refining and leaching operations.
• China Halts Oil Product Exports: China’s National Development and Reform Commission has ordered refiners and traders to prioritize domestic supply, suspending product export permits for April 2026 as Asia faces a crude shortage due to the Hormuz blockade.
• Shell Expands in Venezuela: Shell has signed new agreements with Venezuela to accelerate offshore oil and gas development, aiming to bring the Dragon gas field online and export gas to Trinidad by the third quarter of 2027.

By Tom Kool for Oilprice.com

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