Oil prices hit over two-year highs, with analysts warning that the risk of Gulf oil production stoppages could impact the global economy

Gate News reports that on March 7, after Qatar’s energy minister warned that oil production in the Gulf region could cease entirely within days, oil prices have risen to their highest levels in over two years. Rystad Energy analyst Jorge Leon said the current situation poses a real risk to the global economy. If this situation lasts more than two weeks, the impact on the energy system and the global macroeconomic outlook could be very significant. If Gulf countries cannot export oil, they will need to store it, and once storage is full, production will have to stop. Leon believes that it is “realistic” for oil prices to exceed $100 per barrel, but the key question is how long prices will stay at this level. At that point, governments around the world are likely to release their oil reserves, similar to what happened after the Russia-Ukraine conflict. Quilter investment strategist Lindsay James said that a long-term halt of all oil and natural gas production in the Gulf region is an extreme scenario. Market trends suggest that investors expect the disruption of Strait of Hormuz traffic to be resolved quickly, but the risk that the conflict lasts longer than initially expected is increasing daily. For households, the pressure will mainly be on energy prices rather than broad inflation shocks. The greater economic risk comes from sustained rising energy costs, which could severely hamper economic growth.