Oil prices have witnessed sharp volatility in recent days, surging to levels above $110 per barrel before later retreating to around $91 per barrel, amid mounting concerns over global supply and disruptions to shipping through the Strait of Hormuz.
The developments have directly impacted prices of Brent crude and Middle Eastern benchmark grades.
According to Bloomberg, citing traders, Saudi Aramco has offered prompt crude supplies through a series of rare tenders amid the effective closure of the Strait of Hormuz, which has disrupted shipments and forced the rerouting of flows through the Red Sea.
The report noted that the volumes offered amount to about 4.6 million barrels of Arab crude grades.
Oil price volatility reflects market uncertainty as crude flows through the Strait of Hormuz remain disrupted, experts told Argaam.
They noted that Aramco’s move to offer spot cargoes could help ease supply pressure, but its impact would remain limited compared to the scale of affected oil flows.
Tighter supplies behind price surge
Ali Al-Riyami, former Director General of Oil and Gas Marketing at the Oman Ministry of Energy and Minerals
Ali Al-Riyami, former Director General of Oil and Gas Marketing at the Oman Ministry of Energy and Minerals, said the record price increases stem from an actual tightening of oil supplies from the region.
He explained in remarks to Argaam that the near closure of the Strait of Hormuz and the difficulty for tankers to pass through it are the main drivers behind the price spike.
Al-Riyami added that around 22 million barrels of oil pass daily through the Strait of Hormuz, meaning that any disruption to maritime traffic is immediately reflected in global markets.
Spot cargoes offered to secure supply
Nader Itayem, Gulf and Middle East markets editor at Argus Media, said Aramco’s spot cargo offerings could be interpreted as an attempt to ensure refineries continue receiving Saudi supplies during the period when shipping through the Strait of Hormuz has largely halted.
He told Argaam that one of the tenders appears to involve a cargo that had already been loaded onto a tanker before the outbreak of the war and was en route to Saudi storage facilities in Okinawa, Japan, before later being offered to the market.
Offering these volumes through spot tenders instead of allocating them to long-term contract customers could also be a way to test market demand, although this has not been confirmed.
He noted that the offered volumes of 4.6 million barrels represent only a small portion of disrupted supplies.
According to Argus estimates, Saudi production reached about 10.88 million barrels per day (bpd) in February, while average supplies to markets stood at around 10.1 million barrels per day.
These volumes, he added, would not be sufficient to offset the immediate supply shortfall caused by disruptions to shipments through the Strait of Hormuz.
Al-Riyami said Aramco’s step represents a precautionary measure aimed at easing pressure on both the market and its customers in Asia, amid export constraints through the Strait of Hormuz.
He noted that Saudi Arabia has also used Yanbu Port on the Red Sea as an alternative route to export part of its production. However, such alternatives remain limited compared to the volumes typically shipped through the Strait of Hormuz.
Saudi Arabia produces several crude grades—including heavy, light, and extra-light—to meet the needs of Asian markets, which themselves face limited alternative supply sources.
Al-Riyami added that rising prices for Middle Eastern benchmarks such as Dubai crude, Murban crude, and Oman crude provide further evidence of the pressures Asian countries face in securing oil supplies.
Offering additional volumes to the market may also aim to curb sharp global price increases.
He noted that these volumes may temporarily help ease shortages in the spot market, but they would not be sufficient to offset the significant daily supply disruptions caused by ongoing tensions and limited storage capacity.
Force majeure: What does it mean for the market?
Al-Riyami noted that declarations of force majeure by some countries such as Kuwait, Qatar, and Iraq on certain oil shipments reflect limited storage capacity and export difficulties amid disrupted navigation through the Strait of Hormuz.
He warned that continued developments could lead to an actual decline in global oil supplies, especially if some producers are forced to reduce or temporarily halt production.
Gulf countries account for about 20%–25% of global oil production, making any supply disruption from the region highly impactful, while other producers such as the United States, Canada, Norway, and Brazil may struggle to quickly offset the deficit.
Markets may be overreacting
Itayem noted that markets—which had downplayed geopolitical risks over the past two to three years—may now be overreacting to such risks.
He explained that supply remains the decisive factor. While regional conflicts in previous years had little impact on oil flows, the situation has changed as energy infrastructure has become a direct target and oil flows through the Strait of Hormuz have nearly halted.
Argus estimated that between 6.2 million and 6.9 million bpd of production from Saudi Arabia, the UAE, Bahrain, Iraq, and Kuwait had already gone offline as of March 9, with the figure potentially declining further in the coming days.
The sharp pullback in prices after the surge may also reflect an exaggerated market reaction to comments by Donald Trump suggesting the war could be nearing an end—remarks that do not align with developments on the ground.
Abdulaziz Al-Baghdadi said that shipping disruptions and production cuts in the Middle East, resulting from the closure of the Strait of Hormuz and geopolitical tensions, drove oil prices sharply higher before they later eased amid hopes of reduced supply risks.
He added that the markets also reacted to expectations that the Group of Seven (G7) would tap strategic oil reserves, as well as to comments by US President Donald Trump suggesting that tensions might be nearing an end.
Market Outlook
Al-Riyami expects oil prices to stabilize above $100 per barrel as long as the war continues and supplies through the Strait of Hormuz remain disrupted. Prices could exceed $120 and potentially reach $150 per barrel in the coming weeks if current conditions persist.
Itayem expects further limited gains, with Brent crude likely stabilizing around $100–$105 per barrel while the Strait of Hormuz remains closed.
Al-Baghdadi said oil prices will remain closely tied to geopolitical developments in the region. If shipping disruptions persist, prices could rise again given that roughly one-fifth of global oil trade passes through the Strait of Hormuz.
He added that any prolonged closure of the strait could significantly tighten oil supply and increase risk premiums in the market. Measures such as releasing strategic reserves may help contain price spikes but would not fully offset the disruption of this vital shipping route.
Limited options for OPEC+
Regarding the potential response of the OPEC+ alliance, Itayem said the group’s ability to intervene in the market will remain limited as long as the Strait of Hormuz stays closed.
Even if the alliance announces a symbolic production increase to calm markets, implementing it in practice would remain constrained due to difficulties exporting additional crude.
Most of the alliance’s spare production capacity is concentrated in Gulf countries that rely heavily on the Strait of Hormuz for exports.
Al-Baghdadi added that Gulf producers may face logistical constraints even if production increases, as available pipeline infrastructure limits the volumes that can be transported to markets, especially as some countries have already reduced output due to storage constraints.
He noted that any easing of disruptions or potential relaxation of oil sanctions could allow additional crude volumes to return to the market and help rebalance prices.
Al-Riyami stressed that the current surge in oil prices is not driven by revenue considerations but rather by the consequences of war and supply disruptions, noting that market stability will depend on the restoration of normal navigation through the Strait of Hormuz.
Oil prices have witnessed sharp volatility in recent days, surging to levels above $110 per barrel before later retreating to around $91 per barrel, amid mounting concerns over global supply and disruptions to shipping through the Strait of Hormuz.
The developments have directly impacted prices of Brent crude and Middle Eastern benchmark grades.
According to Bloomberg, citing traders, Saudi Aramco has offered prompt crude supplies through a series of rare tenders amid the effective closure of the Strait of Hormuz, which has disrupted shipments and forced the rerouting of flows through the Red Sea.
The report noted that the volumes offered amount to about 4.6 million barrels of Arab crude grades.
Oil price volatility reflects market uncertainty as crude flows through the Strait of Hormuz remain disrupted, experts told Argaam.
They noted that Aramco’s move to offer spot cargoes could help ease supply pressure, but its impact would remain limited compared to the scale of affected oil flows.
Tighter supplies behind price surge
Ali Al-Riyami, former Director General of Oil and Gas Marketing at the Oman Ministry of Energy and Minerals
Ali Al-Riyami, former Director General of Oil and Gas Marketing at the Oman Ministry of Energy and Minerals, said the record price increases stem from an actual tightening of oil supplies from the region.
He explained in remarks to Argaam that the near closure of the Strait of Hormuz and the difficulty for tankers to pass through it are the main drivers behind the price spike.
Al-Riyami added that around 22 million barrels of oil pass daily through the Strait of Hormuz, meaning that any disruption to maritime traffic is immediately reflected in global markets.
Spot cargoes offered to secure supply
Nader Itayem, Gulf and Middle East markets editor at Argus Media, said Aramco’s spot cargo offerings could be interpreted as an attempt to ensure refineries continue receiving Saudi supplies during the period when shipping through the Strait of Hormuz has largely halted.
He told Argaam that one of the tenders appears to involve a cargo that had already been loaded onto a tanker before the outbreak of the war and was en route to Saudi storage facilities in Okinawa, Japan, before later being offered to the market.
Offering these volumes through spot tenders instead of allocating them to long-term contract customers could also be a way to test market demand, although this has not been confirmed.
He noted that the offered volumes of 4.6 million barrels represent only a small portion of disrupted supplies.
According to Argus estimates, Saudi production reached about 10.88 million barrels per day (bpd) in February, while average supplies to markets stood at around 10.1 million barrels per day.
These volumes, he added, would not be sufficient to offset the immediate supply shortfall caused by disruptions to shipments through the Strait of Hormuz.
Al-Riyami said Aramco’s step represents a precautionary measure aimed at easing pressure on both the market and its customers in Asia, amid export constraints through the Strait of Hormuz.
He noted that Saudi Arabia has also used Yanbu Port on the Red Sea as an alternative route to export part of its production. However, such alternatives remain limited compared to the volumes typically shipped through the Strait of Hormuz.
Saudi Arabia produces several crude grades—including heavy, light, and extra-light—to meet the needs of Asian markets, which themselves face limited alternative supply sources.
Al-Riyami added that rising prices for Middle Eastern benchmarks such as Dubai crude, Murban crude, and Oman crude provide further evidence of the pressures Asian countries face in securing oil supplies.
Offering additional volumes to the market may also aim to curb sharp global price increases.
He noted that these volumes may temporarily help ease shortages in the spot market, but they would not be sufficient to offset the significant daily supply disruptions caused by ongoing tensions and limited storage capacity.
Force majeure: What does it mean for the market?
Al-Riyami noted that declarations of force majeure by some countries such as Kuwait, Qatar, and Iraq on certain oil shipments reflect limited storage capacity and export difficulties amid disrupted navigation through the Strait of Hormuz.
He warned that continued developments could lead to an actual decline in global oil supplies, especially if some producers are forced to reduce or temporarily halt production.
Gulf countries account for about 20%–25% of global oil production, making any supply disruption from the region highly impactful, while other producers such as the United States, Canada, Norway, and Brazil may struggle to quickly offset the deficit.
Markets may be overreacting
Itayem noted that markets—which had downplayed geopolitical risks over the past two to three years—may now be overreacting to such risks.
He explained that supply remains the decisive factor. While regional conflicts in previous years had little impact on oil flows, the situation has changed as energy infrastructure has become a direct target and oil flows through the Strait of Hormuz have nearly halted.
Argus estimated that between 6.2 million and 6.9 million bpd of production from Saudi Arabia, the UAE, Bahrain, Iraq, and Kuwait had already gone offline as of March 9, with the figure potentially declining further in the coming days.
The sharp pullback in prices after the surge may also reflect an exaggerated market reaction to comments by Donald Trump suggesting the war could be nearing an end—remarks that do not align with developments on the ground.
Abdulaziz Al-Baghdadi said that shipping disruptions and production cuts in the Middle East, resulting from the closure of the Strait of Hormuz and geopolitical tensions, drove oil prices sharply higher before they later eased amid hopes of reduced supply risks.
He added that the markets also reacted to expectations that the Group of Seven (G7) would tap strategic oil reserves, as well as to comments by US President Donald Trump suggesting that tensions might be nearing an end.
Market Outlook
Al-Riyami expects oil prices to stabilize above $100 per barrel as long as the war continues and supplies through the Strait of Hormuz remain disrupted. Prices could exceed $120 and potentially reach $150 per barrel in the coming weeks if current conditions persist.
Itayem expects further limited gains, with Brent crude likely stabilizing around $100–$105 per barrel while the Strait of Hormuz remains closed.
Al-Baghdadi said oil prices will remain closely tied to geopolitical developments in the region. If shipping disruptions persist, prices could rise again given that roughly one-fifth of global oil trade passes through the Strait of Hormuz.
He added that any prolonged closure of the strait could significantly tighten oil supply and increase risk premiums in the market. Measures such as releasing strategic reserves may help contain price spikes but would not fully offset the disruption of this vital shipping route.
Limited options for OPEC+
Regarding the potential response of the OPEC+ alliance, Itayem said the group’s ability to intervene in the market will remain limited as long as the Strait of Hormuz stays closed.
Even if the alliance announces a symbolic production increase to calm markets, implementing it in practice would remain constrained due to difficulties exporting additional crude.
Most of the alliance’s spare production capacity is concentrated in Gulf countries that rely heavily on the Strait of Hormuz for exports.
Al-Baghdadi added that Gulf producers may face logistical constraints even if production increases, as available pipeline infrastructure limits the volumes that can be transported to markets, especially as some countries have already reduced output due to storage constraints.
He noted that any easing of disruptions or potential relaxation of oil sanctions could allow additional crude volumes to return to the market and help rebalance prices.
Al-Riyami stressed that the current surge in oil prices is not driven by revenue considerations but rather by the consequences of war and supply disruptions, noting that market stability will depend on the restoration of normal navigation through the Strait of Hormuz.
