Gulf Giants Cut Output, Hormuz Blocked: West Asia War Pushes Oil Market Into Deeper Turmoil

Last Updated:March 08, 2026, 19:41 IST

The United Arab Emirates, Kuwait, and Iraq have already begun reducing production as available tanker storage fills and vessels avoid the Strait of Hormuz.

The oil market is facing escalating turmoil as Gulf producers cut output and the Strait of Hormuz remains blocked amid the ongoing US-Israeli war on Iran, according to a report by Bloomberg.

The blockade of this critical shipping lane, through which a fifth of the world’s crude and liquefied natural gas typically flows, has sent prices soaring and raised fears of extended disruption to global energy supplies.

The United Arab Emirates, Kuwait, and Iraq have already begun reducing production as available tanker storage fills and vessels avoid the narrow waterway.

Other Gulf producers may follow suit if the blockage continues, further constricting supply. Saudi Arabia has partially bypassed Hormuz by diverting crude shipments to its Red Sea coast, but roughly a third of the region’s production is still dependent on the Strait.

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Rising Prices And Market Pressure

According to Bloomberg, the disruption has already triggered a sharp surge in oil prices. Brent crude climbed 30% last week — its largest weekly jump in six years — bringing it just shy of the $100-a-barrel mark.

Regional benchmarks have already exceeded this level, with Abu Dhabi’s Murban crude futures closing at $103 per barrel, Oman crude at $107, and Chinese crude futures at $109 on the Shanghai International Energy Exchange.

“Every additional day of disruption adds pressure, and in that scenario there is effectively no ceiling to prices in the short term," Stefano Grasso, senior portfolio manager at Singapore-based fund 8VantEdge Pte, told the outlet.

Impact On Global Supply And Asia

The disruption is being felt most acutely in import-dependent Asia. Japan, which relies on Gulf crude for over 90% of its needs, has considered drawing on national reserves.

China has curtailed fuel exports to preserve domestic supply, while South Korea is reviewing a possible oil price cap. In northwest Europe, jet fuel prices have reached all-time highs, reflecting the impact of reduced supply and the continuing closure of Hormuz.

Analysts at ING Groep NV project at least four weeks of disruption, with a base case of two weeks of full upheaval and two weeks at 50% flows. In a more severe scenario, a three-month shutdown could push crude and LNG prices to record highs in the second quarter, Bloomberg reported.

“This scenario doesn’t necessarily mean that we see a full end to the conflict in this time period," Warren Patterson, the bank’s head of commodities strategy in Singapore, noted, adding, “But if US and Israeli strikes degrade Iran’s ability to attack vessels and enforce a closure of the Strait of Hormuz, we could see flows starting to normalize."

News world Gulf Giants Cut Output, Hormuz Blocked: West Asia War Pushes Oil Market Into Deeper Turmoil

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