Beyond the strait: why Middle East oilfield shutdowns threaten to keep prices high

"The war in Iran has effectively blocked the Gulf states from exporting a fifth of the world's oil supply to the international buyers through the strait of Hormuz. Iran's attacks on tankers trapped in the vital trade route have erased an estimated 15m barrels of oil from the global market."

"The risk is that the world's biggest oil producers will be forced to shut down many of their fields altogether, keeping prices higher for households and businesses for a sustained period. In a worst-case scenario, analysts have forecast oil could pass the record $147.50 a barrel reached in 2008."

"Oil producers have scrambled to redirect their crude flows to pipelines and storage facilities, but as their pipes and stockpiles reach the brim, the only option remaining is to turn off the taps. The threat to the Middle East's oilfields is now considered the main driver for the upward march of market prices."

The Safaniya oilfield, the world's largest offshore oil facility operated by Saudi Arabia, has shut down due to regional conflict in the Persian Gulf. Iran's attacks on tankers transiting the Strait of Hormuz have removed approximately 15 million barrels from global markets. As export routes become blocked, major oil producers in Saudi Arabia, Iraq, and Kuwait face forced shutdowns of their fields because storage facilities and pipelines are at capacity. These temporary closures, combined with infrastructure damage, are expected to reduce production by 10 million barrels daily. Oil prices have surged above $100 per barrel, with analysts warning of potential record highs exceeding $147.50 if the situation worsens.

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