Gulf crude benchmarks surge as Kuwaiti oil jumps 10% and Brent nears $85 amid regional conflict

Crude oil prices across the Persian Gulf have risen sharply since the outbreak of the Iran war, with Kuwait's benchmark jumping more than 10% in a single session and Brent crude trading near its highest level in over a year.

Kuwaiti crude rose $8.57 to $92.81 per barrel on March 5, up from $84.24 the previous day, according to the Kuwait Petroleum Corporation, KUNA reported on March 6.

The price marks a steep premium over international benchmarks, as Iran continues to target Gulf rivals' oil and gas production facilities. 

Brent crude futures were trading at approximately $84 per barrel on March 6, up roughly 15% from $72.86 a week earlier, having touched a 52-week high of $85.85 during the session. US West Texas Intermediate (WTI) rose to around $79 per barrel, up nearly 18% from the previous week.

The UAE's Murban crude, the benchmark for Abu Dhabi's output traded on ICE Futures Abu Dhabi, was quoted at approximately $93.63 per barrel, according to Oilprice.com.

Murban has commanded a growing premium over Brent and WTI as disruption to Gulf shipping has made physical barrels from the region increasingly scarce.

DME Oman crude, another key Middle Eastern benchmark, and Saudi Arabia's Arab Light have also been trading at elevated levels, though precise daily settlement figures were not immediately available for March 6.

Iraq has already begun shutting in production as exports through the Strait of Hormuz become increasingly constrained, with approximately 1.5mn barrels per day (bpd) taken offline, according to Newbase.com.

Iranian crude exports, which had been running at approximately 1.5mn bpd before the conflict, have effectively ceased since the start of hostilities on February 28. Iran's oil infrastructure has been a direct target of US-Israeli strikes, while shipping through the strait has ground to a halt.

Qatar's Energy Minister Saad al-Kaabi warned on March 5 that crude prices could reach $150 per barrel within two to three weeks if tanker traffic through the strait remained blocked, and forecast gas prices would quadruple to $40 per MMBTU from pre-war levels.

Analysts have warned that global production shut-ins could reach nearly 5mn bpd if disruption to the Strait of Hormuz continues for several weeks, removing a substantial share of global supply from the market.

Qatar's LNG production halt alone has removed approximately 20% of global LNG supply.