Brent crude jumps to more than one-year high as Iraq shuts down giant oil fields

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Brent crude oil futures jumped Tuesday to their best settlement since January 2025, after Iraq cut its oil production ‌by nearly 1.5M bbl/day - which could widen to more than 3M bbl/day in the coming days - in the latest disruption [https://www.reuters.com/business/energy/iraq-reduces-oil-output-more-cuts-come-if-hormuz-disruptions-persist-iraqi-oil-2026-03-03/] to oil and shipments caused by the Middle East conflict.

Iraqi officials said production was cut by 700K bbl/day from the Rumaila oil ​field, 460K bbl/day from the West Qurna 2 field, and 325K bbl/day ⁠from the Maysan field, as disrupted navigation and a shortage of available tankers have pushed storage tanks in southern export terminals toward critical levels, forcing the reductions.

The Strait of ​Hormuz was closed for a fourth ​day after Iran attacked ⁠five ships, choking off the key waterway that accounts for ~20% of global supploy of oil and liquefied natural gas.

QatarEnergy issued a force majeure to buyers whose LNG deliveries were disrupted by its production halt at the Ras Laffan export terminal.

Saudi Arabia shut its biggest refinery, and reportedly may try to reroute ​some crude exports to the Red ⁠Sea to bypass Hormuz.

Spare capacity in Saudi Arabia and the United Arab Emirates can cover for lost Iranian production, "but alternative trade routes can reroute only around a third of normal Strait of Hormuz oil flows," Oxford Economics head of energy forecasting Bridget Payne said in a note.

"We now assume oil supply is disrupted by an average of 4M bbl/day over the next quarter and expect Brent to average $79/bbl in Q2, $15 above our February baseline, before easing as supply resumes by the end of the quarter," Payne wrote.

The rise in crude prices slowed in extended trading after President Trump said the U.S. would provide insurance and naval escorts for ships transporting energy and other commodities through the Persian Gulf.

Trump said the U.S. Development Finance Corporation would "provide, at a very reasonable price, political risk insurance and guarantees" for the financial security of all maritime trade through the Gulf.

Tankers and container ships have avoided the Strait of Hormuz after insurers canceled coverage for vessels, and global oil and gas shipping rates skyrocketed.

Front-month Nymex crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) for April delivery and front-month Brent crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) for May delivery both closed +4.7% to $74.56/bbl and $81.40/bbl, the highest settlement value since June 20, 2025, and January 15, 2025, respectively.

U.S. diesel futures (HO1:COM [https://seekingalpha.com/symbol/HO1:COM]) soared nearly 10% to their highest since October 2023, U.S. gasoline futures (XB1:COM [https://seekingalpha.com/symbol/XB1:COM]) gained 3.6% to nearly $2.46/gal, the highest since July 2024, and crack spreads, which measure refining profit margins, rose to their highest since 2023.

U.S. natural gas futures (NG1:COM [https://seekingalpha.com/symbol/NG1:COM]) also extended gains, with the front-month April contract finishing +3.2% at $3.054/MMBtu, as some late-season cold weather forecast for mid-March supported demand expectations; meanwhile, concerns about LNG supply from Qatar pushed European natural gas futures up another 20%.

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