The blockade of the Strait of Hormuz has sparked an unprecedented energy crisis, with the escalation far exceeding prior expectations from all sides. This crisis also involves a new variable never seen before in history: the rise of Qatar as the world's largest liquefied natural gas (LNG) exporter, which has extended the energy shock from oil to natural gas markets. This has not only caused natural gas prices in Europe and Asia to surge but is also expected to trigger severe ripple effects across industries from chemical manufacturing to Asia's power sector.

The Strait of Hormuz is effectively almost blocked, pushing global energy markets toward what could be the most severe energy crisis since the 1970s.

Oil prices surged immediately at Monday's market open.

WTI crude futures jumped by as much as 22%, breaking through the $110 per barrel mark, while Brent crude futures also rose sharply by 20%, reaching $111.04 per barrel, before paring some gains later.

Simultaneously, as crude oil exports are hindered and storage capacity rapidly dwindles, an increasing number of major Middle Eastern oil producers are being forced to announce production cuts.

As previously mentioned, production cuts are spreading rapidly across the Gulf region.

Kuwait has officially declared force majeure and implemented significant output reductions; the United Arab Emirates has also begun adjusting offshore production levels to alleviate storage pressure.

Goldman Sachs has directly reversed its earlier optimistic assessment, warning that the actual decline in traffic through the Strait of Hormuz is far worse than expected. If flows cannot resume within the coming days, upside risks to oil prices will expand significantly.

More critically, the severity of this crisis has far exceeded initial assessments by all parties.

When the conflict involving Israel and the United States began, officials in Gulf nations widely believed the situation would remain controllable and escalate only to a limited extent, as in past conflicts.

But this time, a historically unprecedented new factor has been added—

Qatar has become the world's largest LNG exporter.

When its key facilities shut down, nearly 20% of global LNG supply was suddenly cut off. Consequently, the energy shock quickly spread from oil markets to natural gas markets.

The result: natural gas prices in both Europe and Asia soared simultaneously.

Next, industries ranging from chemical manufacturing in China to the power sector across Asia may face a series of knock-on effects.

The Hormuz crisis has exceeded everyone's expectations.

The speed of the escalation caught markets off guard, largely due to initial miscalculations by various parties.

According to reports, in the weeks before the attacks, Gulf oil officials received assurances from the U.S. that any retaliation would target only U.S. military bases.

In other words, Iran would not attack energy infrastructure in Gulf countries or attempt to block the Strait of Hormuz.

After all, during a 12-day bombing campaign against Iran last June, the Strait of Hormuz remained open.

Thus, when the attacks occurred, most officials remained optimistic.

It was reported that some officials even exchanged memes in chat groups downplaying the potential Iranian retaliation.

OPEC held a meeting on the first Sunday after the attacks, focusing discussions on whether to increase production, with almost no serious debate about the situation with Iran.

That was until the situation rapidly spiraled out of control.

A senior Saudi official later admitted:

"We truly did not anticipate Iran would target the entire Gulf region, completely disregarding its relations with us."

Subsequently, an audio recording, purportedly of an Iranian naval officer instructing vessels not to enter the Strait of Hormuz, spread quickly within industry WhatsApp groups.

Tanker traffic plummeted immediately, and market sentiment turned to panic.

Storage tanks are nearing capacity, and production cuts are spreading.

The near-blockade of the Strait of Hormuz quickly triggered a chain reaction among Middle Eastern oil producers.

The core reason is simple: oil storage space is running out fast.

Iraq was the first to be forced to curb output as its storage tanks neared capacity, reducing production by over two-thirds.

Subsequently, Kuwait Petroleum Corporation officially declared force majeure.

According to sources, Kuwait's cuts expanded from around 100,000 barrels per day (bpd) on Saturday to nearly 300,000 bpd, with further adjustments expected based on storage levels and the strait's situation.

In January, Kuwait's production was approximately 2.57 million bpd, with the Strait of Hormuz being its only export route. If the strait remains blocked, its storage capacity could be exhausted within weeks, or even days.

Abu Dhabi National Oil Company (Adnoc) also announced on Saturday that it was "adjusting offshore production levels to manage storage needs."

As OPEC's third-largest producer, the UAE produced over 3.5 million bpd in January.

Although Adnoc operates a pipeline to the port of Fujairah with a capacity of about 1.5 million bpd, bypassing the Strait of Hormuz, this route cannot fully replace the strait's transport capacity.

JPMorgan estimates that if the strait remains closed by this Friday:

Daily production declines in the region could exceed 4 million bpd.

By the end of March, the decline could approach 9 million bpd.

This represents nearly one-tenth of global demand.

Saudi Arabia has started diverting some crude exports to the Yanbu port on the Red Sea coast.

However, Goldman Sachs tracking data shows that net redirected flows via pipelines and alternative ports have increased by only about 900,000 bpd over the past four days, far below the theoretical maximum of 3.6 million bpd.

Additionally, attacks on storage facilities at Fujairah port and shortages of marine fuel have further constrained alternative export capacity.

Qatar's LNG shutdown: The crisis's "new variable."

Unlike any previous Middle East energy conflict in history:

Qatar has become the world's largest LNG exporter.

Dependence built over the past 20 years has been fully amplified in this crisis.

Following an Iranian drone attack on Qatar's Ras Laffan gas complex, QatarEnergy announced on March 2 the suspension of LNG production at the facility and declared force majeure.

Ras Laffan has an annual capacity of 77 million tonnes, accounting for roughly 20% of global LNG supply.

Analysis points out that the shutdown isn't solely due to the strait's blockade.

With no ability to ship out cargoes, on-site storage capacity is only about 1 million tonnes—less than five days of normal loading. In other words, QatarEnergy had little choice but to halt production.

The market reaction was immediate.

The European benchmark gas price (TTF) surged approximately 70% over two trading sessions; the Asian spot LNG price (JKM) rose about 50%.

Both hit nearly three-year highs.

LNG tankers are even engaging in a "cargo scramble" on the high seas.

One vessel abruptly changed course toward Asia, with several others making similar adjustments.

Compounding the issue, restarting takes time.

Industry estimates suggest:

Restarting Ras Laffan itself could take about two weeks.

Returning to full production would require another two weeks.

Analysis calculates:

A one-month shutdown could result in a loss of approximately 6.8 million tonnes of LNG.

A three-month shutdown could lead to a loss of around 20.5 million tonnes.

Given previous statements suggesting a conflict duration of four to five weeks, mainstream market scenario assumptions for supply losses are nearing 8 million tonnes.

The problem is, the global LNG market has virtually no spare capacity.

While the U.S. is the largest LNG exporter, its spare capacity is estimated at only about 5%; Norway indicated its gas production is near full capacity; Australia also has limited spare capacity.

Goldman Sachs "tears up its report": Oil price upside risks expand rapidly.

In a March 6 report, Goldman Sachs' commodities research team effectively publicly reversed its previous forecasts.

The baseline scenario previously assumed:

Hormuz traffic would remain at about 15% over the next five days.

Recover to 70% over the subsequent two weeks.

Return to 100% after another two weeks.

Based on this, Goldman raised its Q2 average Brent forecast to $76 and WTI to $71.

But reality quickly shattered these assumptions.

Goldman's latest estimates indicate:

Hormuz traffic has declined by about 90%, equating to a reduction of roughly 18 million bpd.

Actual redirected flows via alternative pipelines are only a quarter of the theoretical maximum.

Meanwhile, most shipowners are now choosing to wait.

The real barrier to vessel transit isn't freight rates but physical security risks—as long as the physical risk exists, ships won't transit regardless of how high freight rates go.

Goldman stated plainly in its report:

If no signs of a resolution emerge this week, oil prices could breach $100 next week.

If strait flows remain depressed throughout March, oil prices (especially refined products) could exceed historical peaks seen in 2008 and 2022.

The report particularly emphasized:

Upside risks to oil prices are "expanding rapidly."

Energy historian Daniel Yergin also warned:

"In terms of daily oil production, this is the largest supply disruption in global history. If it lasts for weeks, it will have profound effects on the global economy."

The U.S. is relatively insulated, but the shock is still spreading.

The U.S. Energy Secretary stated that energy would "soon flow again" through the Strait of Hormuz, attributing price rises largely to market concerns over conflict duration.

The former U.S. President expressed no worry about gasoline prices, expecting a very quick decline post-conflict.

Compared to the 1970s, the U.S. energy structure does provide more buffer.

The oil and gas industry's share of GDP is lower, and the U.S. is now a major energy exporter.

However, the issue remains—

Oil is priced globally.

Rising retail prices for gasoline and diesel will still impact U.S. consumers.

Airline executives have warned that soaring jet fuel prices will squeeze quarterly profits and likely push up airfare costs.

Simultaneously, some U.S. government response measures conflict with existing policies.

To mitigate the impact of Gulf supply disruptions, the U.S. Treasury has eased some sanctions on Russian crude to help countries like India find alternative supplies.

This creates a clear contradiction with previous policies aimed at isolating Russia's oil industry.

According to analysis, the energy shock is having distinctly different impacts in Europe and Asia.

For China's chemical industry, there is a degree of opportunity.

Soaring European gas prices have increased production costs for local chemical firms. This could create market share expansion and product premium opportunities for Chinese chemical companies.

In Asia, however, the problem is more acute—

The market faces a real energy supply shortage.

Analysis notes that approximately 20% of Asia's power and gas sector relies on Middle East LNG, with India, Thailand, and the Philippines particularly exposed.

To cope with fuel shortages and rising costs, some Asian nations have already begun reverting to coal-fired power to maintain grid stability.