$116 Oil and a Blockaded Strait: The Global Energy Crisis Nobody Predicted

Let me tell you what happened while you were sleeping.

At 2:31 AM Eastern Time on March 11, a projectile hit a container ship off the coast of Oman. The crew abandoned vessel. Flames lit up the water. Half a world away, Asian markets opened to find Brent crude trading at $116 per barrel, a 25% spike in three days and the highest since 2022 .

This is no longer a "risk premium" or a "geopolitical jitter." This is a supply shock. And it is getting worse by the hour.

The March 11 Escalation

Let me walk you through what has changed since my last update.

Early Wednesday morning, Iran launched what it called its "most intense and heaviest" salvo yet, three hours of missile fire directed at Israeli cities. Air raid sirens sounded in Jerusalem. Tel Aviv reported injuries .

But the strikes didn't stop at Israel. Iranian drones targeted the Shaybah oil field in Saudi Arabia. Kuwait's defenses downed eight Iranian drones. The UAE reported its air defenses intercepting incoming fire, with six civilians killed and 122 wounded in recent attacks .

The United States military responded by destroying 16 Iranian minelayers near the Strait of Hormuz. President Trump posted on Truth Social: "If for any reason mines were placed, and they are not removed forthwith, the Military consequences to Iran will be at a level never seen before" .

And crucially, for the first time, the United Nations Security Council is set to vote on a resolution, sponsored by the Gulf Cooperation Council, demanding Iran stop attacking its Arab neighbors .

The Production Crunch: What's Actually Shut Down

Here is the reality on the ground, country by country, based on the latest data through March 11.

• Saudi Arabia: Reducing output after storage filled; pipeline to Yanbu insufficient. The kingdom produces roughly 10 million barrels per day and exports about 7 million, but its pipeline spare capacity is only 2 million, not nearly enough to bypass a prolonged Hormuz closure .
• Iraq: Production cut 70% to 1.3 million barrels per day, down from 4.3 million pre-war. Iraq's southern fields, which account for the vast majority of its exports, are entirely dependent on Hormuz passage .
• Kuwait: Implementing precautionary cuts with storage cover estimated at roughly two weeks. Kuwait has no bypass pipeline; all its exports transit the Strait .
• UAE: Managing offshore output with storage buffers estimated at two to three weeks. ADNOC is continuously adjusting operations as the situation evolves .
• Qatar: LNG force majeure declared March 2, halting 20% of global LNG supplies. Qatar's energy minister warned that $150 oil is possible within weeks if the Strait remains closed .

The numbers are stark. JPMorgan estimates that if Hormuz remains closed, production cuts could surpass 4 million barrels per day by the end of this week . To put that in perspective: the Iranian Revolution of 1978 disrupted 5.6 million barrels per day. The 1973 Yom Kippur War: 4.4 million. We are approaching historic territory .

The $116 Question: Where Do Prices Go From Here?

On March 9, Brent broke $100 for the first time since 2022. By March 11, it touched $116 .

Analysts are running out of historical comparisons. "Every additional day of disruption adds pressure, and in that scenario there is effectively no ceiling to prices in the short term," Stefano Grasso, senior portfolio manager at Singapore-based fund 8VantEdge, told Bloomberg .

The International Energy Agency is now considering its largest-ever oil reserve release. G7 leaders will hold emergency video conference later today to discuss the "energy situation," according to the French presidency .

But reserves are a bridge, not a solution. If Hormuz stays closed for weeks, the math becomes unforgiving. Qatari Energy Minister Saad Sherida Al-Kaabi warned that $150 oil within two to three weeks would "severely damage global economies" .

The Market Fallout: Beyond the Pump

Oil at $116 isn't just about what you pay at the pump. It's about what happens to everything else.

Crude is "the industrial blood." It becomes plastics, rubber, textiles, medical supplies. When oil spikes, the costs ripple through supply chains in ways consumers don't see until prices rise on shelves .

Global stock markets are already reacting. The Nikkei 225 plunged over 7% on March 9. Korea's KOSPI fell nearly 7%. S&P 500 futures shed 2.1% .

IMF Managing Director Kristalina Georgieva warned that if oil prices rise 10% and stay there for a year, global inflation increases 0.4 percentage points and growth slows 0.1 to 0.2 points . We are now looking at a 40% increase in two weeks.

What Comes Next: March 12 and Beyond

Here is what I am watching in the coming days.

First, the UN vote. The Security Council will vote today on the GCC resolution demanding Iran halt attacks on its neighbors. If it passes, it would be the first formal international condemnation since the war began .

Second, the IEA decision. A coordinated reserve release could temporarily cool prices. But it's a one-time shot. Markets know this .

Third, the Strait itself. Some Iranian-linked tankers are making "dark" transits, turning off tracking systems through the strait. But normal commercial traffic remains paralyzed. The security firm Neptune P2P Group reported just seven ships passed through since March 8. Normal daily traffic: over 100 .

And fourth, the human toll. Iran's health ministry reports over 1,300 killed and 10,000 civilians injured. Lebanon has seen nearly 500 deaths. Seven U.S. military personnel killed. Twelve Israelis dead .

In Egypt, a mother of six named Om Mohamed told AFP at a Cairo market: "We were barely getting by as it is. I don't know how people will manage" .

The Bottom Line

This is no longer a crisis that might happen. It is happening.

Gulf producers are shutting wells because they have nowhere to store the oil they can't export. Tankers aren't sailing because they can't get insurance. And every day the Strait stays closed, the world burns through what little cushion it has.

The last time oil did this, we called it a shock. Now we're running out of words.