International oil prices have surged past $100

Last weekend, the wave of production cuts by Middle Eastern oil-producing countries accelerated. The Strait of Hormuz remained nearly closed, oil producers were forced to limit or halt production, and storage capacity was nearing exhaustion, putting severe pressure on global energy supplies. Market concerns over supply risks caused international crude oil futures prices to break through $100 per barrel at the start of the new week, marking the first time since mid-2022 that this key threshold was surpassed. Prices peaked near $120 per barrel at one point. However, news of the G7 coordinating the release of oil reserves quickly halved the price gains.

Sharp Fluctuations

Data shows that as of 8 p.m. Beijing time on the 9th, the May delivery light crude oil futures on the New York Mercantile Exchange reached a high of $119.48 per barrel, now retreating to $100.58. The June delivery Brent crude oil futures peaked at $119.50, now down to $102.51.

The near-paralysis of the Strait of Hormuz has become a key trigger for the surge in oil prices. Yan Jiantao, chief analyst at Jucheng Energy, said, “Saudi Arabia, the UAE, and Kuwait’s oil storage facilities are nearing capacity. Due to the closure of the Strait of Hormuz, large amounts of oil cannot be shipped out, causing severe backlog. About 20% of global oil consumption relies on exports through this strait, but shipping companies are wary of Iran launching attacks, and tankers are unwilling to risk passing through this narrow waterway. This means if oil cannot pass through the strait, major oil fields could face shutdowns.”

Reports indicate that oil-producing countries like Iraq, Kuwait, and the UAE have reduced output due to insufficient storage capacity. Additionally, Han Zhengji, an analyst at Jinjian Chuang, added that Saudi Arabia has shut down its largest domestic refinery and is attempting to reroute some crude exports to the Red Sea. Qatar also announced it has halted some energy production. “This means the blockade of the Strait of Hormuz has effectively impacted oil production across Middle Eastern countries, and over time, this force majeure-driven reduction in output caused by inventory limits could further expand.”

Furthermore, Iraq’s oil production has essentially collapsed. Reuters, citing sources, reported that due to conflicts in the Middle East, Iraq’s crude oil cannot be exported via the Strait of Hormuz. The country’s southern major oil fields have reduced output by nearly 70%, now producing only 1.3 million barrels per day, down from about 4.3 million barrels before the escalation of regional tensions. Meanwhile, Iraq’s oil exports have also plummeted to an average of about 800,000 barrels per day, compared to 3.334 million barrels daily in February.

Iraq is OPEC’s second-largest oil producer, with over 70% of its crude used for export. Due to the disruption of shipping through the Strait of Hormuz, ships cannot reach southern Iraqi ports, and local oil reserves have reached maximum capacity. As of the evening of the 8th, only two tankers had completed loading, and with no new arrivals, oil loading operations at the ports have been halted. Iraq has been forced to significantly cut production, prioritizing supply to its domestic refineries.

Market Chain Reaction

After international oil prices broke through $100, the market quickly felt the impact. On March 9, during Asian trading hours, risk aversion swept global markets. The Asia-Pacific benchmark indices fell over 5%, marking the largest intraday decline since April last year. South Korea’s stock market dropped more than 8%, Japan’s over 7%. US and European stock index futures also continued to decline.

Beyond impacting capital markets, rising oil prices will have divergent effects on economies worldwide. Yan Jiantao told Beijing Business Today that a 10% increase in oil prices could lead to a clear “two extremes”: Canada and Latin America, benefiting from energy exports, could see modest GDP growth, while most other regions would face economic tightening.

The Financial Times reported that the surge in international oil prices has put the Trump administration under significant pressure. As of March 8, the average US gasoline price had increased nearly 50 cents per gallon compared to a week earlier, with the upward trend continuing. The AAA latest data showed that last Sunday, retail gasoline prices in the US reached $3.45 per gallon, up 16% from the previous week.

Analysts say that with WTI crude rising, US retail gasoline prices could reach $4 per gallon. This alone could increase the overall Consumer Price Index (CPI) year-over-year by about 0.3-0.5 percentage points. When including diesel, airfare, food prices, petrochemical and plastic products, utilities, and other factors, the Federal Reserve and other global central banks will face serious challenges.

Yan Jiantao pointed out that Central and Eastern Europe, with the highest energy dependence, will suffer the most, with GDP estimated to shrink by 0.39%. India and the Eurozone are also significantly affected, well above the global average. In contrast, China and the US, with stronger economies, energy self-sufficiency, or policy buffers, show greater resilience, with GDP declines kept within 0.1%.

JPMorgan Chase analysts noted that every $10 increase in oil prices could raise the US core inflation indicator that the Fed monitors by 0.1 percentage points, while US GDP growth could slow by 0.2 percentage points.

Coordinated Reserve Releases

Regarding future oil price trends, Jin Ye, fund manager of Galaxy Value Growth Hybrid Fund, said that the current stage is characterized by high oil prices. If the Middle East conflict does not end, there is a possibility that prices could remain high or continue to rise. Even if tensions ease later, due to damaged facilities and the time needed to restore transportation, the lows after a price correction might still be above the $60 per barrel level seen in early 2026.

Some analysts also pointed out that as storage facilities fill up gradually, more oil-producing countries will be forced to cut production. If supply disruptions persist, governments will face increasing pressure to use strategic reserves. Even if the Strait of Hormuz reopens, market rebalancing will take weeks due to transportation cycles, and supply chains will need time to recover.

Xinhua News Agency cited the Financial Times reporting that later on the same day, G7 will hold an emergency meeting to discuss the possibility of jointly releasing oil reserves under coordination with the International Energy Agency to address the surge in oil prices caused by the escalation in the Middle East. Japan’s Ministry of Economy, Trade and Industry also stated that it has asked domestic oil reserve facilities to prepare for reserve releases.

Sources said that G7 officials and IEA Director Fatih Birol will hold a conference call to discuss the impact of the Middle East situation. Some US officials have suggested releasing 300 to 400 million barrels, about 25% to 30% of the 1.2 billion barrels of strategic reserves.

Just three days ago, Birol had a different stance. He said at the time that global oil supply remains ample. When asked whether the IEA is considering activating emergency reserves, he responded, “All options are on the table,” but there are no plans to do so at present. He added, “We do not currently face an oil shortage; the main issue is temporary logistical disruptions.”