Oil Prices Jump Toward $110 as Iran War Sparks Supply Fears

Oil prices surged about 20% on Monday, reaching their highest levels since July 2022, as the expanding U.S.–Israeli war with Iran heightened concerns over global supply disruptions. Brent briefly climbed above $111 per barrel while U.S. WTI also neared $111, extending massive gains from the previous week. Markets are reacting to the effective shutdown of the Strait of Hormuz, a key route for about 20% of global oil flows. The conflict is also widening geographically, increasing fears of prolonged disruptions to energy infrastructure and shipping. Analysts warn that fuel prices could remain elevated for weeks or months even if the conflict ends soon.

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Headlines

· Iran Claims Drone Attack on US-Linked Tanker Near Saudi Port

· Saudi Aramco Boosts Red Sea Oil Shipments

· Iraq Oil Output Falls 60% as Iran War Blocks Tanker Exports

· Middle East Energy Crisis Deepens as Kuwait Cuts Oil Output

· Qatar LNG Halt Sparks Tanker Leasing and Global Cargo Diversions

· US Temporarily Allows Russian Shadow Fleet Oil Sales to India

· Russia Sees Export Boost as Iran War Drives Demand

· US Launches $20B War-Risk Insurance Plan to Restart Hormuz Shipping

· Fuel Prices Surge Worldwide as Iran War Disrupts Oil Supplies

· VLCC Freight Boom May Fade as Futures Signal Rate Drop

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Iran Claims Drone Attack on US-Linked Tanker Near Saudi Port

Iran said it struck a U.S.-linked chemical tanker with a drone near the Saudi port of Jubail, though the vessel’s manager denied that the ship was hit or damaged and confirmed the crew was safe. The UK Maritime Trade Operations centre reported receiving third-party reports of a drone attack in the area. The Marshall Islands-flagged tanker Louis P was anchored near Jubail, close to Saudi Arabia’s major Ras Tanura oil terminal. Iran also claimed to have targeted another tanker entering the Strait of Hormuz, which it has declared closed to vessels linked to countries involved in the conflict.

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Iraq Oil Output Falls 60% as Iran War Blocks Tanker Exports

Iraq’s oil production has dropped by about 60% to roughly 1.7–1.8 million barrels per day as the Iran conflict disrupts tanker availability and blocks exports through the Strait of Hormuz. Output was around 4.3 million bpd before the war began, but the lack of ships has forced producers to cut production as storage fills up. Iraq was the first major Gulf producer to reduce output, with the UAE and Kuwait following similar steps

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Qatar LNG Halt Sparks Tanker Leasing and Global Cargo Diversions

QatarEnergy is offering 10 LNG tankers for lease outside the Strait of Hormuz after halting production at its 77 mtpa facility due to the Iran conflict. The disruption has sent LNG freight rates and gas prices to multi-year highs as Europe and Asia compete for limited cargoes. Several LNG tankers carrying U.S. and Nigerian gas have already diverted toward Asia, where buyers are scrambling to replace Qatari supplies. Spot LNG prices in Asia have surged above $20 per mmBtu, with some deals reaching over $28. Analysts warn that many Asian buyers will struggle to fully replace the lost Qatari cargoes in the coming months.

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US Temporarily Allows Russian Shadow Fleet Oil Sales to India

The U.S. has issued a 30-day waiver allowing Indian refiners to purchase Russian crude from sanctioned “shadow fleet” tankers in a move aimed at easing global oil supply pressures after the Iran conflict disrupted Middle East exports. The measure applies to cargoes that were already loaded before March 5 and stranded at sea due to sanctions. U.S. officials say the short-term waiver will help stabilize oil markets without significantly benefiting Russia. Analysts warn the move could weaken sanctions enforcement and encourage fraudulent documentation within the shadow tanker fleet.

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Fuel Prices Surge Worldwide as Iran War Disrupts Oil Supplies

Gasoline, diesel, and jet fuel prices are rising globally as the Iran conflict disrupts oil shipments through the Strait of Hormuz. U.S. gasoline prices have jumped to around $3.41 per gallon and could approach $4 if the conflict continues, while jet fuel prices have nearly doubled in some markets. Higher oil prices, shipping risks, and rising tanker insurance costs are driving up fuel costs and threatening broader inflation. Asia is already facing supply tightening and stockpiling, while Europe and the U.S. are seeing growing pressure on fuel markets. Analysts warn the energy shock could exceed the market impact seen after Russia’s invasion of Ukraine in 2022.

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US Launches $20B War-Risk Insurance Plan to Restart Hormuz Shipping

The U.S. government has unveiled a $20 billion war-risk reinsurance program to help restart shipping through the Strait of Hormuz amid the Iran conflict. The plan, led by the U.S. International Development Finance Corporation and the Treasury, will provide hull, machinery, and cargo coverage for vessels operating in the Gulf. Officials say the scheme aims to restore flows of oil, LNG, gasoline, and other commodities through the key waterway. However, industry sources say the biggest barrier remains crew safety, as many ship captains and sailors are reluctant to enter the conflict zone. The program marks a major shift in U.S. government involvement in supporting maritime trade during wartime disruptions.

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Venezuela Resumes Diluted Crude Exports After 15-Month Pause

Venezuela has resumed exports of diluted crude oil (DCO) for the first time since late 2024, with a 500,000-barrel cargo shipped by Chevron to the U.S. Gulf Coast. The crude blend, made from extra-heavy oil from the Orinoco Belt mixed with imported naphtha, is widely used by refiners in the U.S. and India. Renewed shipments could help reduce Venezuela’s large inventories, which had reached about 4.8 million barrels by February. PDVSA has accumulated high stockpiles as most exports recently focused on the country’s main Merey heavy crude grade. The restart follows new U.S. licenses that have already enabled traders to export millions of barrels of Venezuelan oil.

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VLCC Freight Boom May Fade as Futures Signal Rate Drop

Freight futures on the Baltic Exchange suggest the surge in VLCC tanker rates caused by the Middle East conflict may soon ease. Forward freight agreements for the key TD3 route from the Middle East Gulf to China are about 48% lower for April compared with current March levels. Rates have recently soared to record highs, with some VLCC charters reaching up to $770,000 per day amid disruptions in the Strait of Hormuz. The waterway normally carries about 20% of global oil, but attacks and security risks have sharply reduced traffic. The futures curve indicates markets expect some normalization in tanker demand and shipping conditions in the coming weeks.