Strikes, tanker attacks and the silent Strait of Hormuz have pushed Brent crude prices to $84, with $90 now in sight.
The closure of Hormuz that no one wants to talk about
– The conflict between Israel, the United States and Iran engulfing much of the Persian Gulf has caused prices to rise by $10 per barrel and liquefied natural gas prices by $15 per MMBtu, with prices for key refined products such as diesel and jets spiraling out of control across the Atlantic basin. – While market watchers are almost unanimous in defining the closure of the Strait of Hormuz as a major bullish factor going forward, few have actually noticed that the strait has been closed over the past two days.
– No crude oil or liquefied natural gas was shipped through the Strait of Hormuz on March 2-3, and dozens of fully loaded ships were anchored in the Persian Gulf in anticipation of the regional fires ending.
– In an effort to calm fears, U.S. Central Command said today that “despite statements from Iranian officials, the Strait of Hormuz is not closed” and despite Saudi Arabia’s official announcement that it will divert all oil exports to the Red Sea to avoid the Strait of Hormuz.
– According to Kpler, there are 55 fully loaded VLCC tankers in the Gulf, an increase of 18 since the first Israeli attack on Iran on February 28.
market mover
– British energy major shell SHEL is reportedly considering selling its minority stake in Australia’s Northwest Continental Shelf LNG project, with ADNOC and MidOcean Energy both expressing interest, and the sale could fetch $24 billion.
– Sonangol sonangal is moving forward with its initial public offering plans, completing debt sales and establishing an investor relations office, as 30% of its shares may be issued in the IPO.
– Norwegian state control Statoil The company (NYSE: EQNR ) is reportedly looking to divest its Angolan assets, with Brazilian and U.S. deepwater operations set to reap faster returns on top of exiting Azerbaijan and Nigeria in 2024.
– Global trading giant Trafigura A five-year LNG term supply contract has been signed with US developer Venture Global (NYSE: VG) starting in the second quarter of 2026, which is the latter’s first mid-term agreement since the arbitration agreement with Shell, BP and Repsol.
Tuesday, March 3, 2026
Events across the Middle East are escalating at an unprecedented rate. Drone strikes on Saudi Arabia’s largest oil refinery, attacks on the world’s largest liquefaction facilities in Qatar, bombings of several oil tankers, widespread cancellations of insurance policies – all of this would normally be spread out over several months in a normal year; however, in 2026, it’s just a day’s operation. With the Strait of Hormuz not open to navigation for several days, ICE Brent crude oil prices rose to $84 a barrel, and if pressure on Gulf producers increases, it is likely to test $90 a barrel.
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OPEC+ chose to be cautious under the pressure of war. OPEC+ members agreed to a relatively modest increase in oil output by 206,000 barrels per day in April 2026, defying pressure to triple their usual monthly quotas over concerns that Iranian supplies will dwindle ahead of the impending closure of the Strait of Hormuz.
Qatar shuts down world’s largest liquefied natural gas plant. Qatar’s state-owned Qatar Energy has halted production at its Ras Laffan liquefaction plant, the world’s largest liquefied natural gas project, following reports that Iranian drones struck an “energy facility” in Qatar as well as the neighboring Mesaïd power plant.
Saudi Arabia relies heavily on Iran for its oil refining operations. Saudi Arabia’s largest refinery, the 550,000-barrel-per-day Ras Tanura refinery on the country’s east coast, completely ceased operations after a drone strike sparked a fire on Monday morning, raising the risk of a Saudi production shutdown.
Chinese refiners seek to cut output. China’s leading private refiners Zhejiang Petrochemical and Fujian Refining, both partly owned by Saudi Aramco, have announced cuts in refinery operating rates in response to stagnant crude supplies from the Middle East.
The stranded tankers pushed oil cargo volumes to record highs. Iran’s closure of the Strait of Hormuz and the risk of tanker collisions or groundings in the Persian Gulf have pushed freight rates for VLCC tankers to new highs, with voyages from the Gulf to China currently at $89 per ton, up 560% since early January.
Asian naphtha balloon bursts out of control. Concerns that Middle Eastern naphtha, mainly supplied by the United Arab Emirates and Qatar, could become stranded in the Persian Gulf have led to Asian naphtha cracks reaching their highest levels since April 2022, with premiums reaching $135 a ton relative to Brent crude.
Platts doesn’t know what Dubai should assess. Global price reporting agency S&P Global Platts has suspended bids and offers for some Middle Eastern crude, refined products and LNG price assessments, allowing only Murban and Oman to trade while all other grades are loaded deep in the Gulf.
Israel shuts down offshore natural gas fields. Israel’s Energy Ministry has ordered the temporary closure of the country’s offshore natural gas platforms, including the Leviathan field operated by Chevron (NYSE: CVX), which supplies 40% of the country’s natural gas needs, and switching to alternative fuels.
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Insurance companies avoided Hormuz as much as possible. Marine insurance companies are canceling war risk coverage for tankers about to enter the Strait of Hormuz, with Gard, Skuld, NorthStandard, the London P&I Club and the American P&I Club jointly claiming that they will cut coverage across the board from March 5.
Keystone XL is probably alive, not dead. Canadian midstream giant South Bow (TSE:SOBO), which is to be spun off from TC Energy in 2024, is reportedly looking to revitalize the Keystone XL pipeline by rerouting it through Montana, which could add another 550,000 barrels per day of crude flows from Canada to the United States.
Nigeria’s neighborhoods are creative. The Nigerian government has split the OPL 245 offshore license block into four new assets operated by European giants ENI (BIT:ENI) and Shell (LON:SHEL), paving the way for the long-stalled development of Nigeria’s largest untapped oil field.
Kurdish producers cut production due to drone attacks. Oil companies operating in semi-autonomous Iraqi Kurdistan have begun shutting down production, with Gulf Keystone and Shamaran shutting down 110,000 barrels per day of output after a massive Iranian drone attack on U.S. military facilities in Erbil.
Get ready for new copper disruption. Copper prices are likely to rise again on supply disruptions after widespread flooding caused the collapse of a bridge linking the Democratic Republic of Congo and Zambia, the country’s main outlet for 3.5 tonnes of annual exports.
Saudi Aramco reshapes the Red Sea. Saudi Arabia’s state oil company Saudi Aramco (TADAWUL:2222) has reminded its buyers that from now on, and for an undetermined period of time, it will only load crude oil tankers from its Red Sea port of Yanbu to transport oil to the West via its 5 million barrels per day east-west pipeline.
Author: Tom Kool, Oilprice.com
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