Iran Conflict Risks Escalation with Potential Devastating Impact on Global Markets

Global Oil and Gas Market Faces Severe Supply Disruption

The heads of major oil and gas companies have issued a stark warning about the economic consequences of the ongoing Iran war, stating that energy markets are not fully pricing in the scale of supply disruption. Executives at the S&P Global's CERAWeek conference in Houston emphasized that the damage goes beyond price volatility, impacting real, physical energy flows.

The closure of the Strait of Hormuz has resulted in a significant supply shock, with ConocoPhillips CEO Ryan Lance estimating that 8-10 million barrels per day of oil and a fifth of the global LNG market are being lost. This has led to physical oil supplies being much tighter than futures prices suggest, according to Shell CEO Wael Sawan and Chevron CEO Mike Wirth.

The industry is bracing for a prolonged period of elevated oil and gas prices, with Kuwait Petroleum Corporation CEO Sheikh Nawaf al-Sabah warning of a "domino effect" that will spread through global supply chains. The costs of the war will not be confined to the region, with analyst Paul Sankey describing the present oil shock as the worst he has seen, potentially more severe than the 1973 Arab oil embargo.

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Industry executives are also expressing concern about the operational and investment risks associated with the conflict, with ConocoPhillips CEO Ryan Lance pleading with the Trump administration for military protection around US-owned assets in Qatar. The company has already evacuated non-essential staff after drone attacks forced the closure of Qatar's LNG hub.

Key Figures:

• 8-10 million barrels per day: Estimated oil lost due to Strait of Hormuz closure
• 49%: Increase in US crude prices since the US and Israel attacked Iran on February 28
• 55%: Increase in Brent crude prices since the US and Israel attacked Iran on February 28
• $99.64: Current price of US crude
• $112.57: Current price of Brent crude
• 3-4 months: Estimated time required for Gulf Arab producers to fully restore production after the Strait reopens