3Voice of the Emirates – Global energy markets are experiencing severe turmoil as the conflict with Iran escalates. This has led to accelerated losses for Gulf Arab states in the oil and gas sector. There are fears of a global energy crisis if the escalation continues.
Direct losses in the billions of dollars
Recent estimates indicate that Gulf states lost over $15 billion in energy revenues during the initial weeks of the war, due to export disruptions and increased shipping and insurance costs. Oil and gas shipments worth approximately $10.7 billion were also disrupted in maritime routes. This occurred amidst the disruption of shipping, particularly through the Strait of Hormuz, a vital artery for global energy transport. Saudi Arabia topped the list of countries with the greatest losses, with its oil revenues declining by about $4.5 billion. Qatar, meanwhile, faces the threat of losses of up to $4 billion per month in its liquefied natural gas (LNG) sector.
Production declines and exports face pressure
In Iraq, one of the region’s largest producers, oil production has plummeted from approximately 3.3 million barrels per day to less than 1 million barrels per day. This decline is a direct result of the disruption to exports via the Gulf. Iraq relies almost entirely on this maritime route, making it one of the countries most severely affected by the crisis, especially given that its budget depends on oil revenues for nearly 90% of its funding.
The Strait of Hormuz: A global chokepoint
Approximately 20 million barrels of oil pass through the Strait of Hormuz daily, representing roughly 20% of global supply. Therefore, any disruption there has a direct impact on the global economy. Military escalation has led to: increased marine insurance costs, delays in energy shipments, and the rerouting of some tankers to longer and more expensive routes.
Indirect losses double
In addition to the direct losses, the region’s economies suffered trade losses estimated at around $30 billion in the first two weeks. This figure is expected to rise to $60 billion within a month if the crisis continues. Pessimistic estimates suggest that total losses could reach approximately $150 billion should the conflict escalate.
Global oil prices rise
On the other hand, geopolitical concerns have driven oil prices higher. Prices are expected to reach between $100 and $120 per barrel, compared to levels around $70 before the crisis erupted. While higher prices may offset some of the losses, the disruption to exports limits the Gulf states’ ability to capitalize on these gains. In contrast, Iran has managed to partially benefit from the price increase through unconventional export channels.
