Iran war spurs scramble for energy export routes out of Gulf

Core Viewpoint - The ongoing conflict in the Middle East is disrupting oil and gas supplies, leading to increased energy prices and forcing oil tankers to divert from the Persian Gulf to the Red Sea, particularly to Saudi Arabia's port of Yanbu [1][10]. Oil Supply and Transportation - Saudi Arabia has increased crude loadings at Yanbu, with seven very large crude carriers (VLCCs) loaded this month, compared to three in the first six days of February, each capable of carrying about 2 million barrels [2][10]. - The Strait of Hormuz, a critical route for a fifth of the world's oil supplies, is largely closed to commercial vessel traffic due to high risks from attacks, leading to a near halt in oil exports for several producers [5][10]. Regional Production Impact - Other oil producers in the region are facing a critical situation as they may have to cut production due to limited storage capacity, with Kuwait already reducing output after running out of storage options [6][10]. - Analysts have indicated that a prolonged closure of the Strait of Hormuz would necessitate production cuts across the region, affecting all producers [6][10]. Global Energy Prices - The conflict has led to a surge in energy prices, with Brent crude surpassing $90 per barrel for the first time in nearly two years, and US oil futures exceeding $89 [7][11]. - The disruptions in oil supply are impacting global markets, with China halting diesel and gasoline exports due to crude delivery issues [8][11]. Refinery Operations - Several refineries in the region have been affected, with Saudi Arabia's largest refinery shut down, Kuwait's major refinery cutting capacity, and Qatar halting refining operations entirely [8][11]. - Bahrain's only refinery, despite being targeted in an attack, continues to operate, highlighting the varying impacts of the conflict on refinery operations across the region [8][11].