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Analysts say the duration of the refinery shutdown will be key in determining the trajectory of Brent prices
Crude Oil
Crude oil prices have surged as Iran exchanges missile and drone strikes with the US and its long-time adversary Israel, intensifying fears of a wider Middle East conflict. The market impact has been amplified by Iran’s reported attacks on US allies in the region, including Saudi Arabia — the world’s second-largest oil producer after the US.
Saudi Arabia’s Ras Tanura refinery, one of the kingdom’s largest facilities, was hit by a drone strike and temporarily shut on Monday. The refinery has a processing capacity of about 550,000 barrels per day, effectively taking nearly 16% of Saudi Arabia’s refining capacity offline.
Beyond crude processing, Ras Tanura is a key supplier of diesel and other refined fuels. Following the shutdown, ICE gasoil futures jumped more than 20%, reflecting immediate supply concerns in product markets.
Saudi Aramco said domestic fuel supplies remain unaffected. However, global traders have already begun pricing in a geopolitical risk premium, given the vulnerability of critical energy infrastructure in the region.
Crude prices reacted sharply. Brent climbed 12% on Monday to a 52-week high of $82.37 per barrel. The situation has been further aggravated by concerns around the Strait of Hormuz, a strategic passage that carries roughly 20% — about 20 million barrels per day — of global oil supply.
Experts cited by Reuters and the Middle East Council on Global Affairs warned that any sustained disruption to Saudi Aramco’s infrastructure could heighten fragility in the global oil supply chain.
Analysts say the duration of the refinery shutdown will be key in determining the trajectory of Brent prices. A disruption lasting about a week may have a limited impact. However, if the outage extends to a month or longer, prices could climb toward $95–$100 per barrel, Mohd Sedek Jantan, investment strategist at IPP Global Wealth, told Malaysian news agency Bernama.
Brokerage JM Financial said in a March 1 report that upside risks to crude had appeared limited due to potential disruptions of 1.5–2 million barrels per day of Iranian exports, given an estimated global oversupply of about 3.7 million barrels per day and Saudi Arabia’s spare capacity of 1–2 million barrels per day.
However, that spare capacity assumption is now under scrutiny following the refinery shutdown. Coupled with the risk of further disruption to Iranian exports — Iran being a significant OPEC producer — oil markets could remain on a volatile, upward trajectory.
As of early 2026, Iran accounts for roughly 3% to 4.5% of global crude output, producing an estimated 3.3 to 4 million barrels per day. Any sustained disruption from either Iran or Saudi Arabia could materially tighten global supply and push prices higher.
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March 03, 2026, 12:50 IST
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