Qatar energy minister warns of potential oil spike to $150 within weeks
“Most of the folks who appreciate just how bullish the US-Israel-Iran war is for oil markets think it’s SO WILDLY BULLISH that they can’t imagine this lasting much longer,” wrote Rory Johnston, founder of Commodity Context.
Oil prices jumped on Friday morning following a Financial Times report that Qatar expects Gulf energy exporters could halt production within days if the Iran war continues.
In an interview with the FT, the country’s energy minister, Saad al-Kaabi, warned the war could “bring down the economies of the world,” with crude prices potentially soaring to $150 a barrel within two to three weeks if tankers cannot safely pass through the Strait of Hormuz, a key trade route carrying about one-fifth of the global oil and gas trade.
As of 7:05 a.m. ET, Brent crude futures are up 4.6% to ~$89.30 a barrel.
Therein lies the crude conundrum, or as Rory Johnston, founder of Commodity Context, put it, the “paradox of the current oil market.”
Oil markets might be underestimating either how much of a positive catalyst this conflict will be for prices in the short term, or how long its duration could keep prices elevated.
In its early stages, oil markets are treating this geopolitical conflict as more of a shorter-term catalyst for prices: prices of front-month Brent futures contracts have gone up much more than third-month futures.
The rise in third-month futures in the sessions following Russia’s invasion of Ukraine, meanwhile, showed that traders weren’t as willing to assume that conflict, and resulting supply disruptions, would be short-lived.
The rise in oil prices is pressuring airlines, with United Airlines, Delta Air Lines, Southwest Airlines, American Airlines, Alaska Air, Frontier Airlines, and JetBlue selling off in the premarket.
Qatar is the world’s second-largest producer of liquefied natural gas (LNG), accounting for roughly 20% of global supply. Even if the war ended immediately, normal deliveries could take “weeks to months” to restore, Kaabi said. Producers across the Gulf may be forced to declare force majeure — a clause freeing parties from contractual obligations during extraordinary events — “in the next few days” if the conflict continues, he added. Qatar shut down its LNG production on Monday following Iranian strikes on the region.
The conflict could also delay QatarEnergy’s massive North Field LNG expansion project, which aims to boost LNG capacity from 77 million to 126 million tonnes a year and was expected to begin production later in 2026.
Equities also ticked down amid the report’s release, with futures on the S&P 500 Index down 0.6% as of 8:25 a.m. ET.
