Since the U.S.-Israeli strikes on Iran began on February 28, Tehran has launched ballistic missiles targeting Israel, U.S. military bases, oil depots, and other infrastructure across the Gulf region. Iranian attacks on several vessels passing through the Strait of Hormuz have dramatically reduced traffic in the narrow channel. About 20 percent of global oil and gas supplies transit through the Strait of Hormuz. On Thursday, Iran attacked fuel tankers in Iraqi waters. As of Monday morning, Brent crude was priced at $106 per barrel, up more than 40 percent from $72 per barrel on February 27.
On March 2, QatarEnergy suspended its LNG production after an Iranian drone attack, straining the global LNG market. About 84 percent of the crude oil and 83 percent of the LNG that passed through the Strait of Hormuz in 2024 was bound for Asia, according to data from the U.S. Energy Information Administration. China, India, Japan and South Korea accounted for nearly 70 percent of those oil shipments with about 15 percent bound for the rest of Asia, according to the U.S. Energy Information Administration.
Global commodity prices are set to tumble to a five-year low in 2025 amid an oil glut that is likely to limit the price effects even of a wider conflict in the Middle East, according to the World Bank's latest Commodity Markets Outlook. Overall commodity prices will remain 30% higher than they were in the five years before the COVID-19 pandemic. From 2024 through 2026, global commodity prices are projected to plummet by nearly 10%.
Next year, the global oil supply is expected to exceed demand by an average of 1.2 million barrels per day, a glut exceeded only twice before during the 2020 pandemic shutdowns and the 1998 oil-price collapse. The new oversupply partly reflects a major shift in China, where oil demand has essentially flatlined since 2023 amid a slowdown in industrial production and an increase in sales of electric vehicles and trucks powered by LNG. Several countries not part of OPEC+ are expected to ramp up oil production, and OPEC+ itself maintains significant spare capacity of 7 million barrels per day, almost double the amount on the eve of the pandemic in 2019.
Global food prices are set to fall 9% this year and an additional 4% in 2025 before leveling off, leaving food prices nearly 25% above the average level from 2015 through 2019. Energy prices are expected to drop by 6% in 2025 and an additional 2% in 2026. Falling food and energy prices should make it easier for central banks to control inflation, but an escalation in armed conflicts could complicate that effort by disrupting energy supply and driving up food and energy prices.
Conflict in the Middle East has brought significant volatility to oil prices over the past year, particularly due to concerns about damage to oil and gas infrastructure if the conflict intensifies. Assuming the conflict does not intensify, the annual average price of Brent crude is expected to fall to a four-year low of $73 in 2025, down from $80 a barrel this year. The report assesses what might happen if the conflict escalates, specifically if it reduces the global oil supply by 2%, or 2 million barrels per day, by the end of this year.
High prices, conflict, extreme weather, and other shocks have made more than 725 million people food insecure in 2024.
Oljeshejkerna Johnsson is a Swedish family-owned company that sells and distributes petroleum products. Oljeshejkerna Johnsson operates thirty-six gas stations in Småland and surrounding areas. The company was founded in 1922 and originally consisted of a chemical shop.
In the 1950s, the company began selling heating oil, and in the 1970s, it began selling gasoline as an agent for Shell and Uno-X. In the late 1990s, sales developed through own gas stations. In 2008, the company had five stations and was establishing a sixth; today it has a total of 36 stations.
The company has primarily established itself in smaller towns where larger gasoline companies have closed their gas stations. Oljeshejkerna Johnsson AB is a complete oil company that supplies private individuals, companies, municipalities, hauliers, and agriculture with gasoline, diesel, heating oil, and lubricants. The company's vision is to be the obvious choice as a full-range supplier of diesel, heating oil, and lubricants in Småland, Västergötland, and Blekinge.
The company is proud to dare to invest in the countryside where it is constantly expanding with new gas stations. In 2023, the company opened a total of two new gas stations, and in 2024, more are on the way.
Key unknowns persist, including how long the conflict is expected to last and whether it will escalate further, as well as the effectiveness of OPEC+ and other producers in stabilizing the market amid the conflict. The current status of Iranian attacks and whether they have ceased or are ongoing also remains unclear, adding to market unpredictability.
Additionally, it is uncertain how Asian countries are specifically managing the disruption to oil and LNG supplies, with potential implications for global energy security.