Strikes, tanker attacks, and a muted Hermes push Brent to $84, with $90 oil now in sight.
The Dam of Hormuz that no one wants to talk about
– The Israel-US-Iran conflict that has engulfed much of the Persian Gulf has pushed oil prices above $10 per barrel, LNG prices to $15 per MMBtu, and key refined products such as diesel and jet fuel have spiraled out of control across the Atlantic basin. – While market observers almost unanimously define the closure of the Strait of Hormuz as the main urgent factor, in fact very few people have noted that it has been closed for the past two days.
– No crude oil or LNG transits through the Strait of Hormuz on March 2-3, with dozens of fully loaded ships anchored across the Persian Gulf awaiting an end to the regional conflict.
– US Central Command, seeking to allay fears, said today that the Strait of Hormuz has not been closed despite Iranian officials, while Saudi Arabia has officially announced that it will transfer all its oil to the Red Sea to prevent the Strait of Hormuz.
– According to Kepler, there are already 55 VLCC tankers in the Gulf, up from 18 ships since Israel’s initial attack on Iran on February 28.
Market movers
– a UK-based energy giant Shell (LON:SHEL) is reportedly considering selling its minority stake in Australia’s Northwest Shelf LNG project, potentially fetching $24 billion for the sale as both ADNOC and MidOcean Energy have announced interest.
– National Oil Company of Angola Sunangol Moving forward with its plans for an initial public offering, completing debt sales and establishing an investor relations office as 30% of its shares could be offered in an IPO.
– Under Norwegian government control Equinor (NYSE:EQNR) is reportedly looking to divest its Angolan assets, building on 2024 exits from Azerbaijan and Nigeria, eyeing rapid returns in Brazil and U.S. deepwater.
– International business giant Trafigura US developer Venture Global (NYSE:VG) has signed a 5-year LNG term delivery agreement starting in Q2 2026, the latest first interim deal concluded after arbitration deals with Shell, BP and Repsol.
Tuesday, March 03, 2026
Incidents are escalating in the Middle East at an unprecedented pace. Drone attacks on Saudi Arabia’s largest refinery, attacks on the world’s largest oil facility in Qatar, multiple tanker bombings, massive insurance policy cancellations – all usually spread over a few months in a typical year; However, in 2026, it is only worth one day. With the Strait of Hormuz seeing no movement for several days, ICE Brent prices have reached $84 per barrel, and it could test $90 per barrel if pressure on Gulf producers increases.
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OPEC+ opted for caution in war tensions. OPEC+ members agreed to a relatively modest increase in oil production to 206,000 b/d for April 2026, defying pressure to triple their normal monthly quota over fears that Iranian supplies would be cut as the Strait of Hormuz was closed.
Qatar shut down the world’s largest LNG plant. Qatar’s state-owned company Qatar Energy halted production at its Ras Laffan liquefaction plant, the world’s largest LNG facility, after reports emerged that Iranian drones had targeted an “energy facility” in Qatar, as well as a nearby power plant in Mesaid.
Saudi Arabia’s settlement benefits Iran greatly. Saudi Arabia’s largest refinery, the 550,000 b/d Ras Tanura plant on the country’s east coast, was completely shut down after a drone strike on Monday morning, raising the risk of a shutdown of Saudi production.
Chinese refiners go for a run cut. China’s leading private refiners Zhejiang Petrochemical and Fujian Refining, both owned by Saudi Aramco, have announced cuts in operating oil prices in response to the shutdown of crude oil supplies from the Middle East.
Dumped oil tankers push oil cargo to record levels. Iran’s closure of the Strait of Hormuz and the risk of tanker collisions or strandings in the Persian Gulf have pushed freight rates for VLCC tankers to new highs, with Gulf to China voyages now at $89 per metric ton, up 560% since early January.
Asia’s Napata balloon is out of control. Fears that Middle East naphtha, a flow of 1.2 million b/d mostly fed by the United Arab Emirates and Qatar, could be stranded in the Persian Gulf pushed Asian naphtha crude to its highest since April 2022, with a premium against Brent reaching $135 a tonne.
Platts doesn’t know what Dubai values. International price reporting agency S&P Global Platts has suspended bids and offers for some Middle East crude products, refined products, and LNG price assessments, allowing only Marban and Oman to trade as all other grades deep in the Gulf.
Israel shuts down offshore gas fields. Israel’s Energy Ministry has ordered the temporary shutdown of the country’s offshore gas platforms, including Chevron’s (NYSE:CVX) Leviathan field, which supplies 40% of the country’s gas needs, to switch to alternative fuels.
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Insurers avoid Hormuz as much as possible. Marine insurers cancel war risk cover for tankers entering Strait of Hormuz, with Guard, Scaled, North Standard, London P&I Club, and American Club jointly claiming they will drop cover entirely from 5 March.
Keystone XL may be more alive than dead. Canadian midstream major Southern Bo ( TSE:SOBO ), spun off from TC Energy in 2024, is reportedly looking to revive the Keystone XL pipeline through Montana, potentially boosting the flow of crude oil from Canada to the U.S. by another 550,000 b/d.
Nigeria is getting creative with its blocks. The Nigerian government has broken the OPL 245 offshore license block into four new assets operated by European majors ENI ( BIT:ENI ) and Shell ( LON:SHEL ), paving the way for long-term development of Nigeria’s largest untapped field.
Kurdish producers cut output amid drone strikes. Oil companies operating in semi-autonomous Iraqi Kurdistan have halted production, with Gulf Keystone and Shamran cutting 110,000 a day of production after a series of Iranian drone attacks on US military facilities in Erbil.
Prepare yourself for a new copper mess. Copper prices could be pushed higher by supply disruptions after widespread flooding caused the collapse of a bridge in the Democratic Republic of Congo with Zambia, its main export route of 3.5 mtpa.
Saudi Aramco has restored the Red Sea. Saudi Arabia’s state-owned oil company Saudi Aramco (TADAWUL: 2222) has warned its customers that from now on it will only load crude oil tankers from the Red Sea port of Yanbu and transport oil to the west via the East-West Pipeline.
By Tom Cole for Oilprice.com
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