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Mon, 09 Mar 2026

Mon, 09 Mar 2026 Why the price of oil matters more than you might think

A shock to oil supplies is rattling financial markets, driving up prices at the pump and raising fears of a bigger economic hit.
The war is blocking 20% of the world's crude supply through the Strait of Hormuz, with producers outside the region unable to ramp up production quickly enough to compensate. This has led to output cuts from major oil-producing countries like Iraq, Kuwait, and the UAE. Natural gas supplies have also been affected, with Qatar's state energy firm halting production due to military attacks. The International Energy Agency (IEA) has warned of "visible shortages" in Asia and Europe within a week if the crisis is not resolved. The economic impact is expected to be significant, with Goldman Sachs estimating that a temporary rise in oil prices to $100 per barrel could knock 0.4 percentage points off global economic growth. Analysts warn that if the conflict continues beyond this month, global oil prices could exceed recent peaks seen after Russia's invasion of Ukraine, potentially hitting $150 per barrel. The ripple effects are being felt across various industries, including chip-making in Taiwan and tech firms building out their artificial intelligence infrastructure in the US. Additionally, higher energy costs may lead to price increases for fertiliser, affecting food production and prices worldwide. In Asia and Europe, governments have announced price caps and rationing measures, with some countries discussing plans to release oil reserves to alleviate the crisis. However, analysts say that such a move would be limited in its impact due to the scale of demand. The economic risks are greatest in Asia and Europe, which are heavily dependent on energy imports. Analysts warn that if the situation continues, it could lead to a prolonged fight, keeping prices elevated despite any declaration of hostilities by the US and Israel.