Analyst sees Brent in $95-110 band; Bab-el-Mandeb risk may trigger $130/bbl

Asia at the epicentre of the Hormuz Crisis

Three weeks into the most consequential energy shock since the 1973 Arab oil embargo, the full weight of what the Middle East war means for Asia is only beginning to crystallise. The benchmark oil prices hit $119 per barrel on March 9, but have retreated since then; however, they are still holding above $100 per barrel, while the Indian crude oil basket, which is a mix of Oman and Dubai grades, is trading above $130 per barrel indicating the scarcity of oil due to closure of “Strait of Hormuz”. 

 

For Asian economies that built decades of industrial growth on the assumption of affordable, freely flowing Gulf energy, the current dislocation is not merely a price shock — it is a structural crisis.

 

 

The numbers alone are disquieting. In 2024, an estimated 84 per cent of crude oil and condensate shipments through the Strait of Hormuz were destined for Asian markets. The geography of dependence could not be more exposed. Washington bears relatively little of the crude transit burden through Hormuz. Its Asian allies and partners absorb almost all of it.

GCC production collapse: Unprecedented in scale

The supply-side damage is historic in dimension. The IEA's March 2026 Oil Market Report concluded that Gulf countries have cut total oil production by at least 10 mb/d, with crude production curtailed by at least 8 mb/d and a further 2 mb/d of condensates and NGLs shut in. 

 

Major reductions span Iraq, Qatar, Kuwait, the UAE, and Saudi Arabia — producers that collectively underpin the global energy system. The oil production of Kuwait, Iraq, Saudi Arabia and the UAE collectively dropped by a reported 7 mb/d by March 9, reaching at least 10 mb/d by March 12. Qatar Energy, Kuwait Petroleum Corporation, Bapco, and Saudi Aramco have either shut production or declared force majeure. Saudi Arabia's Ras Tanura — the world's largest crude export terminal — has suspended operations.

 

The IEA's emergency release of 400 million barrels from strategic reserves across 32 member nations is welcome but arithmetically insufficient: at global consumption of 105 mb/d, 400 million barrels covers barely four days of demand, or roughly 20 days of typical Hormuz flows.

Crack spread crisis: A fuel market broken at its seams

If the headline crude price tells one story, the crack spread tells a far more alarming one. Crack spreads — the margin between the cost of crude oil and the price of refined products — have shattered every historical benchmark. The jet fuel crack spread, which averaged about $15 per barrel earlier in the year, surged to $100 per barrel by early March — nearly 5 times the earlier level. 

 

Diesel margins, tracked through the US gasoil crack against Brent, widened sharply as ICE low-sulphur gasoil futures surged more than $100 per metric ton in early trading. Diesel cracks have surged 110 per cent, and Gasoline cracks are up 90 per cent in three weeks, far outpacing gains in crude itself.  

 

The structural reason for this divergence matters enormously for Asia. Gulf producers' medium sour barrels yield higher proportions of middle distillates — jet fuel and diesel — compared to most other grades from Africa and South America. More than 4 mb/d of export-oriented refining capacity in the Gulf is at risk of shutting as product storage tanks fill, with nowhere to send output.

 

For Indian airlines alone, aviation turbine fuel accounts for nearly 40 per cent of operating expenses, and the crack spread explosion has forced IndiGo and Air India to impose fuel surcharges on passengers -a direct transmission of the geopolitical shock into household costs for one of Asia's fastest-growing consumer markets.

Inflation, stagflation, and central bank trap

The inflationary arithmetic is unforgiving. Under the assumption of a six-week closure of the Strait of Hormuz and a jump in oil prices to $85 per barrel, regional inflation in Asia could rise by about 0.7 percentage points, with Brent now at $100 and the closure extending into a third week, that estimate requires significant upward revision.

 

The policy trap is exquisite in its difficulty. The ongoing conflict "solidifies the case for many central banks to hold rates steady for now," the Fed policymakers would be in great dilemma which had been expected to deliver rate cuts in 2026, now faces a consumer price index that could rise from 2.4 per cent to 4 per cent by year-end if prices hold.

The road back: How long to pre-war supply levels?

Even assuming a ceasefire is achieved in the coming weeks, the assumption that supply recovers quickly would be dangerously complacent.

 

The infrastructure damage alone will define the timeline. Ras Tanura's reinstatement requires security clearance, structural inspection, and export logistics — a process of at minimum four to six weeks under optimistic assumptions. Qatar's Ras Laffan LNG facilities, struck by drone attacks, face a longer rehabilitation: LNG trains are among the most technically complex energy infrastructure on earth. We believe that consumers and businesses worldwide face weeks or months of higher fuel prices even if the conflict ends quickly, as suppliers grapple with damaged facilities, disrupted logistics, and elevated risks to shipping.

 

We estimate that crude supply from the GCC would reach approximately 60% of pre-war levels within four to six weeks of a durable ceasefire, assuming the Strait reopens to commercial traffic with US Navy escorts. Kpler's noted that jet and diesel crack spreads are likely to remain elevated well beyond conflict resolution as supply chains require physical rebalancing that no amount of diplomatic goodwill can accelerate.

Short-term energy outlook

In the immediate term, our commodity desk maintains a $95–110 per barrel range for Brent as the base case through Q2 2026, with a ceasefire-driven correction to $80–90 possible in Q3 if diplomatic progress materialises. The tail risk of a Bab-el-Mandeb closure — which would block Saudi Arabia's Red Sea bypass pipeline exports to Yanbu — remains our most critical scenario watch; such an event would put $130+ back on the table immediately.  (Disclaimer: This article is by Mohammed Imran, research analyst, Mirae Asset Sharekhan. Views expressed are his own.)