World News: Oil Bottleneck in Mideast Threatens Global Economy

“President Trump's promise to protect the Strait of Hormuz with naval escorts and provide government-backed marine insurance underscores the urgent need to restore flows of energy from the Middle East before soaring prices rip through the world economy.

 

As of Wednesday, day five of the war on Iran, several thousand ships were stuck inside and outside the Persian Gulf, trapping roughly a fifth of the oil and liquefied natural gas the world consumes each day. The blockage is cascading through the region's industry as storage tanks fill up with oil that can't set sail, forcing producers to slash output.

 

The problem is most acute in Iraq, the world's fifth-biggest producer. Output has more than halved, said oil officials in the country, with cutbacks at the southern Rumaila and West Qurna 2 fields. "Others are poised to follow if the blockage of the Strait continues," said Antoine Halff, co-founder of data-provider Kayrros.

 

In Fujairah, part of the United Arab Emirates, several shipping-fuel suppliers suspended deliveries on Wednesday after an attempted Iranian drone attack, said Gulf energy officials. Its port is where many vessels load up on the marine fuel that powers their voyages.

 

The cost of chartering tankers to transport oil from the Persian Gulf has rocketed, and now equates to 20% of the price of a crude cargo, compared with 3% in normal times, said Argus Media analysts.

 

Cutbacks prompted by dwindling storage compound disruptions from Iranian attacks on regional energy infrastructure, which prompted Qatar's national producer to stop making liquefied natural gas.

 

Saudi Arabia's Defense Ministry said Iran targeted its Ras Tanura loading terminal and refinery complex again Wednesday, but there was no damage.

 

To unblock the Strait, President Trump said Tuesday that the Navy would escort tankers, and the U.S. International Development Finance Corp. would insure ships.

 

The Navy sent a message to tankers Wednesday saying they could ask for assistance if they want to sail through the Strait, said shipping executives with tankers stuck in the Gulf.

 

Traders questioned whether the U.S. would be willing to put expensive naval ships in harm's way.

 

Even if U.S. ships conducted escorts, the market wouldn't return to normal, possibly functioning in daylight hours only.

 

Industry players say insurance is less of an issue holding back ships. Though several insurers sent notices canceling policies covering war-related risks in the region this week. They did so to renegotiate at higher prices. More costly insurance ultimately would feed through to the price of oil, but nowhere near as much as curtailed Iraqi production.

 

As of Wednesday morning, at least eight tankers had been attacked near the Strait.

 

Workarounds to the Strait of Hormuz are kicking in.

 

Saudi Aramco is offering crude from the Red Sea instead of the Persian Gulf, a spokesman said. The national producer operates a pipeline connecting its Abqaiq oil-processing center in the east of Saudi Arabia to Yanbu port on the Red Sea.

 

Analysts at consulting firm Rystad Energy said up to 10 million barrels of oil would stay stuck in the Persian Gulf daily even if Saudi and Emirati pipelines that bypass the Strait pumped at full capacity.” [1]

 

1. World News: Oil Bottleneck in Mideast Threatens Global Economy. Wallace, Joe; Feng, Rebecca; Said, Summer.  Wall Street Journal, Eastern edition; New York, N.Y.. 05 Mar 2026: A7.