As the world absorbs the shock of oil surging past $90 a barrel — its biggest weekly gain since the Covid-19 pandemic — the question on every economist’s and policymaker’s mind is: what comes next? The Iran conflict has delivered an energy shock of historic speed and severity, and the trajectory from here depends on a set of variables that are deeply uncertain and beyond the control of any single government or institution.
The most immediate question is whether the storage crisis building in the Gulf will force further production cuts before it is resolved. Kuwait has already cut output, and Saudi Arabia and UAE face the same situation within 20 days according to energy consultants. If those countries halt production, the supply shock would be severe and lasting — given the weeks required to restart halted wells. This scenario alone could push oil significantly above its current $91 level.
The next question is the Strait of Hormuz. Nine vessels have been attacked since the conflict began, and Iran’s Revolutionary Guard continues to threaten further strikes. Around 600 ships, including 195 oil tankers, are stranded in the Gulf. The Trump administration’s military escort offer has not restored confidence. As long as the strait remains effectively closed, the storage crisis will worsen and the production pressure will build.
Qatar’s energy minister has provided the most extreme scenario: all Gulf exporters halting production within weeks and oil reaching $150 a barrel. The minister also warned that even a ceasefire today would leave Qatar’s LNG exports offline for weeks or months as damaged infrastructure is repaired. European gas prices have already hit three-year highs, and the LNG competition between Europe and Asia shows no sign of easing.
The financial market consequences of all these developments are already playing out. Asian stocks have had their worst week since the pandemic. European and UK equities have fallen more than 5%. Bond yields have surged to crisis levels. Rate cut expectations have been abandoned. Airlines have warned of massive losses. The economic damage from this week alone is enormous — and if the situation worsens, as Qatar’s minister fears it will, the coming weeks could be even harder still. The global economy has been tested. Whether it passes that test depends entirely on how quickly and peacefully the Iran conflict can be brought to an end.