The Islamic Revolutionary Guard Corps has closed the Strait of Hormuz, which is a key route for global oil supplies.
As FT notes, Saudi Arabia, the UAE, Iraq, and Kuwait are now forced to either reduce production volumes or completely shut down their fields. This is due to the threat of storage overflow from the accumulation of oil in the Persian Gulf.
New attacks on energy infrastructure and oil could lead to a sharp rise in prices, which would be the first such event in the last four years, the article states.
Kuwait has already begun to reduce production at some of its fields. The main reason for this step has been the overflowing storage facilities due to problems with hydrocarbon exports amid the escalating conflict in the region.
The Strait of Hormuz is an important artery through which approximately 20% of the world's oil and up to 30% of liquefied natural gas from the Persian Gulf countries, including Iraq, Saudi Arabia, Kuwait, Bahrain, Qatar, and the UAE, is transported to Asian markets.
Experts warn that blocking this "corridor" could lead to a sharp spike in energy prices.
