Oil prices surged Thursday as the U.S.-Israeli war on Iran deepened, traffic through the Strait of Hormuz remained effectively frozen, Iraq cut crude output and Qatar halted LNG production. In the clearest sign yet that the crisis has moved from fear to physical disruption, Reuters reported Brent up 2.05% to $83.07 a barrel and U.S. crude up 2.6% to $76.60, March 5, 2026.
The shock is not just about headlines. As Reuters’ Strait of Hormuz explainer notes, about a fifth of the world’s oil consumption passes through the chokepoint, along with almost all of Qatar’s LNG exports. With shipping near a standstill for a fifth straight day, traders are now pricing a real supply bottleneck rather than a short-lived war premium.
That bottleneck is already forcing barrels off the market. Iraq has cut nearly 1.5 million barrels per day of production and could be forced to shut more than 3 million bpd if tankers still cannot move and storage keeps filling at southern terminals. At the same time, Qatar has declared force majeure on gas exports and shut gas liquefaction, with sources saying it may take at least a month to return to normal volumes.
Why oil prices are rising so fast
This rally looks more durable than the usual one-day geopolitical spike because three stress points are tightening at once: shipping, crude output and LNG. Iraq is losing room to store unsold barrels, Qatar is removing a supplier that accounts for about 20% of global LNG exports, and tanker traffic through Hormuz remains severely disrupted. That combination raises the odds that refiners and utilities will have to bid more aggressively for replacement cargoes from outside the Gulf.
The first pain is likely to be felt in Asia. Reuters reported that Asia sources about 60% of its crude imports from the Middle East, making refiners in Japan, South Korea, India, China and Singapore especially exposed if the disruption drags on. Qatar’s gas outage compounds that pressure because more than 80% of its LNG normally goes to Asian buyers.
What oil prices are signaling about the next phase of the crisis
The market is no longer asking whether the conflict can lift oil prices. It is asking how long the supply losses last. If Hormuz reopens quickly, part of the spike could unwind just as fast. But if Iraq’s cuts deepen, Qatari LNG stays offline and tanker traffic remains frozen, the debate will shift from risk premium to rationing, and $100 Brent will stop looking like an outlier scenario.
That matters far beyond the oil patch. Higher crude lifts diesel, gasoline, freight and petrochemical costs, while tighter LNG supply pushes up electricity and industrial fuel prices at the same time. This is no longer only an energy-market story; it is becoming an inflation story again.
Oil prices and the long memory of Gulf shocks
This market has seen Gulf risk before, but usually one fault line breaks at a time. In June 2025, Reuters argued in a June 2025 analysis that Hormuz risk still looked more like fear than reality. In March 2023, Iraq halted northern crude exports through Turkey, exposing how quickly its export system can seize up. And in September 2019, attacks on Saudi Aramco briefly sent oil prices sharply higher before emergency supply measures calmed traders.
What makes this episode different is the overlap. Shipping through Hormuz is constrained, Iraqi barrels are already coming off the market, and Qatar’s LNG outage is tightening gas balances at the same time. Until at least one of those pressure points eases, oil prices look likely to stay elevated and volatile.
