The Iran conflict is rapidly sorting the world’s nations into two categories: those who benefit from oil at $91 a barrel and those who suffer. In the winners’ column, at least theoretically, are oil-producing nations outside the conflict zone — Norway, the United States, Canada, and others — whose revenues are swelling as crude prices surge more than 25% in a single week. In the losers’ column sits most of the rest of the world, facing higher energy costs, inflation, and economic slowdown.
The irony is that many of the Middle East’s biggest oil producers — the countries that would normally be the biggest winners from high oil prices — are among those most damaged by the current crisis. Kuwait has been forced to cut production due to storage constraints, Saudi Arabia and the UAE face the same problem within 20 days, and Qatar’s LNG export infrastructure has been damaged. These producers are seeing oil at $91 a barrel but cannot fully benefit because they cannot sell what they cannot move.
The clearest losers are energy-importing nations, particularly in Asia. Japan, South Korea, India, and China are among the world’s largest oil and LNG importers and are acutely exposed to both the oil price surge and the LNG supply disruption caused by damage to Qatar’s export terminal. Asian stock markets had their worst week since the pandemic, reflecting the economic costs that are about to land on these economies.
In Europe, the situation is complicated by the dual nature of the energy shock: higher oil and higher gas prices simultaneously. European gas prices have surged to three-year highs as Qatar’s LNG disruption reduces available supply. UK bond markets experienced their worst week since the Liz Truss mini-budget crisis. Interest rate cut expectations have collapsed, and airlines — among Europe’s most exposed businesses — have issued major profit warnings.
Qatar’s energy minister has warned of an even more extreme scenario: oil at $150 a barrel if all Gulf exporters halt production. At that price level, the economic divide between oil producers and importers would become even more extreme — and the political consequences for importing nations, already facing public pressure over the cost of living, could be severe. The conflict has created an energy wealth transfer of potentially historic proportions.