War threatens up to 4M bpd supply loss as oil rally deepens

Global oil markets are bracing for a potential supply shock as the escalating conflict in the Gulf threatens to remove millions of barrels of crude from the market while pushing prices sharply higher.

- Issac John

Analysts warn that production losses could exceed 3 million barrels per day within days and rise above 4 million barrels per day if the disruption drags on, tightening supplies in a market already on edge over security risks in the region.

Oil prices have already begun climbing as attacks on tankers, refinery disruptions and the near halt of shipping through the Strait of Hormuz choke off vital energy flows from the Middle East. Brent crude rose above $83 per barrel, while US benchmark West Texas Intermediate approached $77, as traders priced in the risk that supply disruptions could deepen if tanker traffic and exports remain constrained.

The Strait of Hormuz — the narrow waterway linking the Arabian Gulf with global markets — handles roughly 20 per cent of the world's seaborne oil trade and a significant portion of global liquefied natural gas shipments.