Iran Tensions Overshadow Houston Oil Forum Amid Global Energy Crisis

The U.S.-Iran conflict is overshadowing the CERAWeek energy conference in Houston as the Strait of Hormuz remains effectively closed, disrupting global oil and gas supply chains. Tanker traffic through the critical waterway has dropped nearly 90%, raising concerns over energy security and market stability. President Donald Trump issued a 48-hour ultimatum for Iran to reopen the strait or face targeted strikes on power plants, a move that could escalate the regional crisis. Iran has responded by threatening to shut the strait completely and target energy infrastructure in the Gulf, including facilities operated by U.S.-linked companies.

The impact of the conflict is already being felt globally. Middle Eastern oil exports have fallen by at least 60% in the week to March 15 compared to February, according to shipping data and Reuters calculations. The closure of the Strait of Hormuz has forced Gulf exporters to redirect shipments through alternative but limited routes, including Saudi Arabia's Yanbu terminal and the UAE's Fujairah terminal. These routes, however, are vulnerable to disruption, making the region's oil exports increasingly fragile.

Goldman Sachs Group Inc. has raised its 2026 oil price forecasts due to the prolonged disruption of flows through the strait. The firm now expects Brent crude to average $85 a barrel in 2026, up from an earlier forecast of $77. West Texas Intermediate is now projected to average $79 a barrel, compared to $72 previously. The bank attributes the upward revision to an assumption that flows through Hormuz will remain at only 5% of normal levels for six weeks, followed by a one-month recovery.

Why Did This Happen?

The conflict began escalating after Iran attacked Qatar's Ras Laffan LNG terminal, demonstrating its ability to disrupt regional energy infrastructure. In response, the U.S. has imposed a firm deadline for Iran to reopen the strait, warning of strikes on power plants if the demand is ignored. Iranian officials have warned that any attack on their infrastructure will trigger retaliatory strikes on regional energy assets, including facilities in Israel and Gulf states.

The situation has created the largest supply shock in global energy markets in history. International Energy Agency Executive Director Fatih Birol has described the current disruptions as equivalent to the two major oil crises in the 1970s and the 2022 natural gas crisis following Russia's invasion of Ukraine. The IEA is considering releasing stockpiled oil if necessary to mitigate the impact of the crisis.

How Did Markets Respond?

Energy prices have surged amid the crisis. Oil prices briefly exceeded $120 a barrel in early March, levels not seen since the 2022 Ukraine war. Countries heavily dependent on Gulf oil exports have taken emergency measures to manage energy costs, including Japan capping gasoline prices with subsidies and South Korea freezing public utility rates.

The crisis has also affected global economic policy. The Philippines has introduced a four-day workweek to conserve energy, while the U.S. has rejected concerns that its actions in Iran could hurt long-term energy interests. Energy Secretary Wright and other top executives from major oil companies are expected to discuss the crisis at CERAWeek.

What Are Analysts Watching Next?

Analysts are closely monitoring the potential impact of alternative oil export routes. If key routes like Saudi Arabia's East-West pipeline and the UAE's ADCOP pipeline are compromised, moving oil out of the Arabian Peninsula could become 'virtually impossible'. Matt Smith of Kpler has warned that these routes are highly vulnerable, with Yanbu's exports already surging to 2.5 million barrels per day.

The crisis has also exposed vulnerabilities in liquefied natural gas (LNG) supply chains. Qatar's Ras Laffan LNG terminal was damaged in Iranian strikes, reducing its export capacity by 17% and requiring up to five years for repairs. The attack has been condemned by the Qatari Foreign Ministry as a 'dangerous escalation'.

Investors are advised to remain cautious as the conflict shows no sign of resolution. The longer Brent crude remains above $100 a barrel, the more concern investors will have over the security of supply from the Middle East. The crisis has also prompted questions about the structural risks of the region's high concentration of production and spare capacity.