The Iran conflict has driven the oil price past $90 a barrel to its highest weekly gains since the Covid-19 pandemic six years ago, threatening a fresh rise in global inflation.

Reports that Kuwait had begun cutting production of oil at some fields after running out of space to store it drove the cost of a barrel of Brent crude to as high as $91.89 at one point on Friday – its highest since April 2024 and up from about $72.50 just before war broke out.

The price of the international benchmark has surged by more than 25% since the US-Israel attack on Iran last weekend, its biggest weekly jump since the week to 3 April 2020.

Fears are now growing over a broader storage crisis in the Middle East that could force the world’s biggest oil producers to halt extraction.

Holding facilities in Saudi Arabia and the United Arab Emirates could reach their limit within 20 days, according to consultants at Kpler, potentially forcing further shutdowns. This is considered a last resort for producers because the costly process of restarting can take weeks, piling further pressure on the markets.

Concerns have been compounded by Qatar’s energy minister, who predicted that if the war continued unabated all Gulf energy exporters would shut down production within weeks and oil would rise to $150 a barrel.

Saad al-Kaabi told the Financial Times that even if the war ended immediately it would take “weeks to months” for the Gulf state to resume its liquified natural gas exports after an Iranian drone strike damaged a key terminal. The country accounts for about 20% of global exports of LNG.

Britain relies on Qatar for only about 2% of its total gas supplies but prices on the UK gas market surged to three-year highs this week amid fears that Europe may need to pay a premium to compete with buyers in Asia for gas cargoes if deliveries do not resume soon.

Iran’s Islamic Revolutionary Guard Corps have threatened to “set ablaze” any western tanker attempting to pass through the strait, which provides a vital trade route for about a fifth of the world’s oil and liquefied natural gas. At least nine vessels have been attacked in the Gulf since the US and Israel first began strikes on Iran on Saturday 28 February, according to Lloyd’s List.

The market has remained unconvinced by the Trump administration’s attempt to calm nerves by offering insurance and a military escort for tankers that opt to sail through the narrow waterway, according to Aaron Hill, chief market analyst at FP Markets. At least 600 vessels are estimated to be in the Gulf, including 15 liquified natural gas carriers and 195 oil tankers, according to Lloyd’s List.

The gas market highs have fuelled inflation fears in a blow to UK government bond prices, putting the yields – the interest rate on the debt – on five- and 10-year bonds on course for their biggest one-week jump since then prime minister Liz Truss’s “mini-budget” in September 2022.

Hopes of a cut to UK interest rates this month have waned through the week; the money markets now see it as just a 15% chance, down from 80% last week.

Eurozone government bond prices also fell this week, putting yields on track for their biggest weekly rise since March last year. The money markets are now almost fully pricing in a rate rise from the European Central Bank by the end of this year.

Meanwhile, stock markets in Asia-Pacific countries, which rely on energy imports from the Gulf region, had their worst week since the start of the Covid-19 pandemic six years ago. In the UK, the FTSE 100 share index fell by more than 5%, its worst week since April 2025 when Donald Trump announced sweeping global tariffs. The pan-European Stoxx 600 index also fell by more than 5% over the week.

Airline stocks had a torrid week. IAG, the parent company of British Airways, fell by more than 12%, while low-cost airline Wizz Air lost about a fifth of its value, after issuing a profits warning on Wednesday and predicting the Middle East crisis could wipe €50m off its profits.

While the US dollar strengthened since the Iranian attacks began, the gold price fell by about 3.5% during the week to below $5,100 an ounce.