What caused oil to hit a 22-month high?

Geopolitical shocks have tightened global energy supplies

A cascade of disruptions tied to the widening Middle East conflict has driven crude to multiyear highs. Attacks and counterattacks across the region, threats to shipping through chokepoints such as the Strait of Hormuz, and operational interruptions at major energy facilities have pushed markets to price in a larger supply risk premium.

Key drivers

• Facility outages: QatarEnergy declared force majeure on some LNG exports after damage and disruptions at Ras Laffan, removing a reliable source of gas from global flows.
• Shipping disruption: Operators rerouted or paused services and some carriers suspended sailings linking the Middle East with Asia and Europe, tightening cargo availability.
• Risk premium: Buyers and traders are pricing in the prospect of longer-term supply losses and insurance and freight-cost increases that feed through to crude and fuel prices.

Economic knock-on effects

• Consumers: Retail gasoline jumped sharply in a short span, reflecting higher crude and regional fuel shortages. One headline metric showed an 11% weekly rise in pump prices in some markets.
• Markets: Equity indices faced volatility as investors weighed higher energy costs against broader growth prospects; bond markets also reacted to inflation risk.
• Policy responses: Governments moved to secure alternate supplies, including emergency shipments and temporary waivers to allow purchases of oil otherwise restricted by sanctions.

Outlook

The path for prices will hinge on how long shipping risks persist, whether major producers can offset lost output, and whether diplomatic or military developments stabilize trade routes. If disruptions are sustained or widen, officials and markets warn prices could climb much higher, with substantial implications for inflation and growth.