The Iranian Crisis and Its Impact on Global Oil Companies

Fifteen days into the U.S.-Israeli military campaign against Iran, the global oil industry is experiencing what the International Energy Agency has called the "biggest supply disruption in the history of the oil market." The de facto closure of the Strait of Hormuz has removed approximately 10 million barrels per day from global supply — roughly 10% of world production — sending crude prices surging past $100 per barrel and forcing oil companies worldwide to confront a crisis without modern precedent.

A Supply Shock of Historic Proportions

Since U.S. and Israeli forces launched airstrikes on Iran on February 28, the conflict has rapidly expanded beyond military and nuclear targets to engulf the entire Persian Gulf energy corridor. Iran has declared the Strait of Hormuz — through which roughly 20 million barrels per day of crude and products normally flow — closed to "tankers and ships of enemies," according to Al Jazeera reporting.

The IEA confirmed in its March Oil Market Report that Gulf countries — including Saudi Arabia, Iraq, Kuwait, Qatar, and the UAE — have slashed combined oil production by at least 10 million barrels per day due to shipping disruptions. With limited bypass capacity and storage filling up, the agency warned that "in the absence of a rapid resumption of shipping flows, supply losses are set to increase."

In response, the IEA has coordinated the largest emergency release of oil stocks in history — 400 million barrels from strategic reserves — though it acknowledged this is a "stop-gap measure" that cannot offset a prolonged disruption.

Saudi Arabia: The Biggest Producer Hit

Saudi Arabia, the world's largest oil exporter, has slashed production by roughly 20% — approximately 2 million barrels per day — after shutting down output from the massive Safaniya and Zuluf offshore fields. Production has dropped from 10.882 million bpd in February to around 8 million bpd.

The kingdom has attempted to reroute exports through its East-West pipeline to the Red Sea port of Yanbu, and has offered 2 million barrels for sale from the Red Sea. However, analysts at Vortexa estimate Yanbu's loading capacity at around 3 million bpd — far short of the 6+ million bpd Saudi Arabia previously exported through Hormuz.

$15 Billion in Losses and Counting

According to commodities analytics firm Kpler, as reported by the Financial Times, Gulf oil producers have already lost at least $15.1 billion in oil and gas revenues since the war began — approximately $1.2 billion per day based on average 2025 prices and volumes.

Qatar has halted all LNG production at Ras Laffan, the world's largest liquefaction complex, and declared force majeure to customers. Combined with UAE volumes, the conflict has trapped 20% of the global LNG supply in the Gulf. Iraq has capped output near 1.4 million bpd, and analysts warn it is the most fiscally vulnerable Gulf producer given its lack of a substantial sovereign wealth buffer.

Oil Prices: $100 Today, $200 Tomorrow?

As of March 14, Brent Crude is trading above $103 per barrel and WTI above $98 — but investment banks warn this could be just the beginning. According to a compilation of bank forecasts:

• Goldman Sachs expects Brent to average over $100/bbl in March, with Q4 potentially averaging $93/bbl if disruptions last two months.

• Macquarie has warned of $150/bbl if Hormuz remains closed for several weeks.

• UBS expects a move above $100 and into "demand destruction" territory at $120/bbl.

• Wood Mackenzie sees $150/bbl in coming weeks, and has stated that "$200/bbl is not outside the realms of possibility in 2026" — noting that unlike the 2022 Russia-Ukraine price spike, "supply volumes at risk this time are dimensionally bigger — and real."

• Bank of America has taken a contrarian view, recommending selling oil above $100.

  
  

The OPEC Basket price has surged to $120.90/bbl — a 15% jump — underscoring the severity of the supply crunch.

Winners and Losers Among Oil Companies

International Majors: A Mixed Picture

TotalEnergies disclosed that the conflict has shut in 15% of its global oil and gas production across Qatar, Iraq, and UAE offshore operations. However, the French supermajor noted that "a higher oil price more than offsets the loss of Middle East production" — an $8/bbl increase in Brent is sufficient to compensate for the lost cash flow at $60/bbl assumptions. Onshore UAE production (210,000 bpd) and the Satorp refinery in Saudi Arabia remain operational.

Other international majors with diversified, non-Gulf portfolios — ExxonMobil, Chevron, ConocoPhillips — are net beneficiaries, as their unaffected production sells at crisis-level premiums.

U.S. Producers: Price Without the Pain

American shale and conventional producers are the clearest winners. WTI Midland is trading at $101/bbl, Eagle Ford at $92/bbl, and Western Canadian Select at $83/bbl — all posting double-digit percentage gains. However, analysts caution that $100 oil is unlikely to spark a new shale boom given capital discipline commitments and infrastructure constraints. The Trump administration is weighing a rare Jones Act waiver to ease domestic fuel distribution.

Russia: The Unexpected Beneficiary

In a striking irony, Russia has emerged as a major beneficiary of the crisis. With Gulf supply offline, 19 million barrels of Russian crude have been cleared for sale in Asia. The U.S. has even opened a brief window for stranded Russian crude — an extraordinary reversal reflecting the severity of the global supply crisis.

Downstream: Under Severe Pressure

Refiners and fuel-dependent industries are bearing the brunt. China's Sinopec is slashing refinery rates amid the crude supply shock. TotalEnergies has frozen fuel prices in France citing "exceptional volatility." Airlines face existential margin pressure, with reports suggesting only three U.S. carriers can remain profitable at current prices.

The Kharg Island Gambit

On March 13, President Trump announced that U.S. forces had conducted "one of the most powerful bombing raids in the history of the Middle East" on Iran's strategic Kharg Island — which handles approximately 90% of Iranian crude exports. Critically, the strikes targeted military facilities while deliberately sparing oil infrastructure.

"For reasons of decency, I have chosen NOT to wipe out the oil infrastructure on the island," Trump wrote, warning that this could change if Iran continues to disrupt Strait of Hormuz shipping. This implicit threat represents perhaps the most significant escalation risk for global oil markets: destroying Kharg's export capacity could cripple Iran's economy for years, but would simultaneously send oil prices sharply higher.

Iran has responded by warning that "Gulf energy assets could burn" if its oil facilities are targeted — a threat underscored by the drone attack on the UAE's Fujairah oil hub and the evacuation of Oman's key oil port.

What Comes Next

The trajectory of oil markets hinges entirely on the duration and scope of the Hormuz disruption. The IEA's emergency stock release buys time — weeks, not months. If shipping lanes partially reopen through U.S. naval escorts, as Trump has suggested, markets could stabilize in the $90–$100 range. If the conflict escalates to direct strikes on energy infrastructure, $150 or even $200 oil becomes a realistic scenario.

For oil companies, the calculus is straightforward: those with Gulf exposure face volume losses partially offset by price; those without it are reaping windfall profits. But the broader risk — a sustained supply disruption triggering global recession and demand destruction — threatens the entire sector.

Investment advisory services offered through Propulsion Capital Management LLC, an Investment Advisor in the State of California. Propulsion Capital Management is a Registered Investment Advisor providing research and analysis on global markets. For more insights, visit propulsioncapitalmanagement.com.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.