Oil markets reacted sharply on March 2, with prices surging up to 13% after retaliatory Iranian strikes disrupted tanker movement in the Strait of Hormuz, following military action by the United States and Israel on Iranian targets.
Brent crude climbed to $82.37 per barrel, its highest level since January 2025, before stabilizing near $78.60. Meanwhile, West Texas Intermediate (WTI) touched $75.33 intraday before easing to around $71.84. The spike reflects immediate supply-chain anxiety rather than structural shortage concerns.
For the lubricant and base oil industry, the Strait of Hormuz remains a critical logistics artery. Roughly 20% of global crude supply transits this corridor daily, including exports from Saudi Arabia, the UAE, Iraq, Kuwait, and Iran. The route also handles significant volumes of diesel, jet fuel, and gasoline shipments to key Asian demand centers, including China and India.
Despite the sharp price reaction, analysts suggest the market currently views the situation as a geopolitical shock rather than a systemic supply crisis. The International Energy Agency has reportedly engaged with major Middle East producers and stands ready to coordinate strategic petroleum reserve releases if required.
Inventory data provides some cushion. According to Goldman Sachs, global visible oil stocks stand at 7.83 billion barrels, equivalent to approximately 74 days of demand, in line with historical norms.
Market outlook remains volatile. Citi projects Brent trading within the $80–$90 range in the near term. However, escalation targeting regional oil infrastructure could push prices toward $120 per barrel, though analysts estimate that probability at around 20%.
From a lubricant manufacturer’s perspective, sustained crude volatility could tighten base oil margins, elevate feedstock costs, and increase freight premiums. Strategic inventory planning and flexible pricing strategies will remain essential until geopolitical risks stabilize.
Drone Interception at Ras Tanura: Market Implications
Amid escalating Iranian drone and missile activity in the Gulf following regional tensions, Saudi Arabia intercepted and destroyed two drones targeting the Ras Tanura Refinery on March 2, according to an official statement.
A senior official at the Ministry of Energy confirmed the refinery sustained minor damage from debris during the interceptions, which caused a small fire promptly controlled by emergency teams. No injuries or fatalities were reported.
Some refinery units were temporarily shut down as a precaution, but domestic crude oil and petroleum product supply remained unaffected, ensuring continuity for base oil feedstock and downstream lubricant production.
In the lubricant and energy markets, such incidents highlight the ongoing geopolitical risks that can affect crude supply stability, feedstock availability, and short-term price volatility.
Gas Markets Face Elevated Geopolitical Risk
European natural gas prices could more than double if shipments through the Strait of Hormuz were disrupted for a month, according to Goldman Sachs.
In a March 1 note, analysts highlighted that current market indicators in Europe and Asia have yet to reflect the geopolitical risk premiums linked to Iran fully.
Roughly 20% of global liquefied natural gas (LNG), primarily from Qatar, transits this corridor. A one-month disruption could drive European gas and Asian spot LNG prices up by as much as 130%, reaching around $25 per million British thermal units.
For energy and lubricant producers, such disruptions could tighten feedstock supply, increase operational costs, and create volatility across derivative fuel and base oil markets.
Egypt Adjusts Gas and Electricity Flows Amid Regional Supply Disruptions
Egypt has temporarily halted the supply of around 100 million cubic feet per day of natural gas to Syria and Lebanon via the Arab Gas Pipeline, following interruptions in supplies from Israel’s Tamar Field and Leviathan Field in the eastern Mediterranean.
Volumes received through the regasification vessel Energeos Force, docked at Aqaba Port, were redirected to meet domestic demand and supply Jordan’s power plants, compensating for the shortfall from Israeli gas.
Under prior agreements, Egypt had supplied 100 million cubic feet per day to Syria and Lebanon during the winter months, with Syria delivering 50 million cubic feet to Lebanon. These arrangements are now paused due to the current supply shortage.
In addition, Egypt has increased electricity exports to Jordan by roughly 29%, raising the supply from 175 MW to 225 MW to stabilize the Kingdom’s power system. Officials confirmed this increase will not affect domestic electricity loads, ensuring that local demand remains fully met.
For energy and lubricant markets, these shifts highlight the sensitivity of regional gas supply chains and electricity infrastructure, underscoring the potential impact on feedstock availability, power-dependent operations, and derivative fuel production.
Editor-at-Large
A passionate writer in the lubricant industry, Awais Iqbal has been covering oils, greases, and industrial fluids since the start of his career. At 25, he’s already written for blogs, catalogs, and brand guides across the UAE. Awais’s insights help companies connect with their audience, and his clear, helpful writing style is trusted by brands in the region.
