Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Global energy prices are rising sharply following the latest developments in the Middle East, with oil and natural gas markets pricing in heightened geopolitical risk and potential supply disruptions.
Oil prices have climbed more than 15% since Friday. The benchmark Brent crude contract gained about 6% on Tuesday to trade above $82 per barrel, its highest level since July 2024.
By 1326 GMT, Brent futures were up $5.70, or 7%, at $83.44 a barrel after touching $85.12 earlier in the session, according to a Reuters price update.
US West Texas Intermediate crude rose $5.03, or 7%, to $76.26, after hitting an intraday high of $77.58, the strongest level since June.
Union Bancaire Privée (UBP), in its latest weekly assessment, said oil prices will act as the main conduit through which geopolitical shocks are transmitted to the global economy.
“If oil prices remain around $80/bbl for a short period of time, the impact on global activity and inflation should remain limited and manageable,” the UBP report said.
However, if oil rises to $100/bbl, the drag on activity would likely become more pronounced, potentially knocking close to 0.5 percentage points off global growth and adding around 2.0 percentage points to inflation, according to UBP.
In a more severe scenario involving a major oil disruption and a prolonged closure of the Strait of Hormuz, Brent prices could rise to around $120/bbl, a level that could significantly weaken current growth dynamics and potentially push activity into recession.
UBP noted that while broader financial conditions remained supportive through February, a sustained spike in crude prices could recalibrate 2026 interest rate expectations if energy costs begin to fuel broader inflationary pressures.
At the same time, it added that supportive policy settings and resilient corporate earnings continue to underpin the global economic backdrop under its baseline scenario.
Natural gas markets have also reacted strongly. European benchmark prices surged more than 52% at the Title Transfer Facility (TTF) on March 2, following QatarEnergy’s decision to halt LNG production and the effective disruption of maritime traffic through the Strait of Hormuz.
“With Qatari LNG output halted and the Strait of Hormuz closed, global LNG supply is set to tighten sharply, a trend already reflected in recent price movements,” said Jan-Eric Fahnrich, Senior Analyst, Gas & LNG Research at Rystad Energy.
Rystad Energy expects the supply shock to have a limited long-term impact, assuming the disruption proves temporary and manageable in volume terms.
In a scenario where there is limited or no infrastructure damage and hostilities subside quickly, leading to a 15-day production halt, global LNG output in 2026 could decline by 4.3%, equivalent to around 3.3 million tonnes (Mt), Fahnrich said.
A more prolonged disruption could result in 5.6 Mt of lost supply, while a full-scale interruption lasting four to five weeks before the Strait reopens would translate into a loss of approximately 11.2 Mt for the full year 2026.
Given the central role of LNG exports in Qatar’s economy and global trade flows, Rystad expects production to be restored within weeks rather than months.
Even in a worst-case scenario, opportunistic producers could bring up to 15 Mt of incremental LNG to market, while sanctions relief could potentially reinject additional Russian volumes, although such an outcome would depend on significant policy shifts, Rystad said in its analysis.
Rystad noted that while the ongoing US-Israel campaign is set to tighten global gas supply in 2026, the market currently features relatively looser balances and expanding trade flows compared with previous crises.
The impact is likely to fall most heavily on price-sensitive South Asian buyers, including Bangladesh and Pakistan, rather than on premium markets able to bid more aggressively for cargoes.
