The global economy is facing untold damage even if the Iran conflict ends tomorrow, warns this energy-industry expert

By Barbara Kollmeyer

Drones are among the new threats facing an unprepared industry

Now is not the time to relax over the Iran war, says energy expert Anas Alhajji.

Oil has shot to its highest in a year and stocks are tumbling on Tuesday as worries build over a spreading conflict in the Middle East. That's as JPMorgan's Jamie Dimon warned of complacency by investors.

Our call of the day would tend to agree. It comes from respected energy expert Anas Alhajji, who worries investors are missing a major crisis unfolding after Iran's bigger-than-expected reaction to U.S. and Israel attacks.

Iran on Monday targeted Saudi Aramco's Ras Tanura oil refinery and Qatar's liquified natural gas production in separate strikes. Tuesday saw reports of a major fire at an oil storage site in the United Arab Emirates from drone debris. He said the market had not priced in Iranian attacks on neighboring energy production.

"Those attacks on the neighboring countries and on the oil facilities are changing the whole landscape right now, changing all the expectations from the scenarios we believed would prevail yesterday to new scenarios," Alhajji said in an podcast interview with Mario Nawfal late Monday.

That "big crisis" stems from 14 to 15 million barrels of crude that comes from the Gulf, said Alhaji, the former chief economist of Dallas private-equity firm NGP Energy Capital Management and now managing partner of Energy Outlook Advisers.

Alhajji said the world has enough oil for the short run because Iran, Saudi Arabia, the United Arab Emirates and Iraq moved large quantities out of the Gulf ahead of U.S. and Israeli attacks. But that covers probably about two or three weeks, while China has about two months of supply from building up after last year's U.S. arrest of Venezuela President Nicolás Maduro, he said.

A war ending tomorrow would not stop bottlenecks that will take several days to clear from ships avoiding the Strait of Hormuz. Oil-producing countries that cut production will take time to get back online, he said.

"We never had those problems before. The Hormuz Strait never been closed before," he said.

But it's not just oil, as methanol and food are at risk. Alhajji noted 33% of the world's globally traded fertilizers come from the Gulf, with planting season under way in Asia and Europe. Even if the war ends within weeks, people will be paying "the price of this for months to come if the fertilizer issue becomes a food crisis later on," he said.

An even bigger problem than oil, stored in nearly every global country, is the LNG issue, he said. Europe will be facing higher prices as it turns to Russia for LNG or compete with Asia for supplies that will "go to the highest bidder," which is always Asia, he added. Dutch TTF natural gas futures surged a fresh 33% on Tuesday after spiking 39% on Monday.

Under this scenario, Russia and the U.S. LNG industries are big winners, said the analyst. The U.S. is the world's biggest exporter of liquefied natural gas, with shares of under-the-radar play Venture Global (VG) soaring on Monday.

While this helps in President Donald Trump's goal of energy dominance, there are other consequences.

"The problem with the Trump administration is that they are not looking at the unintended consequences of their actions and their policies," he said. In the run-up to the U.S. attack on Iran, for example, public discussion over a likely closure of the Strait of Hormuz moved China to revive an old pipeline to get more gas from Russia, said Alhajji.

And while experts are discussing finding other routes or pipelines for energy, he says the industry faces threats from technology that didn't exist 20 years ago.

"Right now, as we speak, a couple of young people with $500 can buy certain equipment and literally wreak havoc on the oil industry by bombing a pipeline or a pumping station in the middle of the desert. We've seen it before."

Read: Here is the 'worst-case scenario' for oil and the Strait of Hormuz

The markets

U.S. stocks DJIA SPX COMP are sinking, oil (CL.1) (BRN00) is soaring, Treasury yields BX:TMUBAMUSD10Y BX:TMUBMUSD30Y and the dollar DXY are up, gold (GC00) and silver (SI00) are under pressure. Asia's red-hot Kospi KR:180721 sank 7%.

   Key asset performance                                                Last       5d     1m      YTD     1y 
   S&P 500                                                              6881.62    0.64%  -1.36%  0.53%   17.64% 
   Nasdaq Composite                                                     22,748.86  0.54%  -3.57%  -2.12%  23.97% 
   10-year Treasury                                                     4.063      2.50   -20.40  -10.90  -18.50 
   Gold                                                                 5327.5     1.52%  13.81%  22.97%  83.45% 
   Oil                                                                  72.59      9.50%  16.46%  26.44%  6.02% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

As more blasts were heard across the Middle East on Tuesday, the State Department has been warning Americans to get out.

Target shares (TGT) rose as the discount retailer forecast a modest sales bounce and better-than-expected profit for this year.

Best Buy stock (BBY) is soaring despite disappointing outlooks as profit jumped.

MongoDB shares (MDB) are sinking after disappointing guidance from the database-software group.

CrowdStrike (CRWD) and Ross Stores (ROST) will report after the close.

Blackstone (BX)reported heavy outflows from its flagship private-capital fund.

Amazon Web Services (AMZN) said three ?facilities ?in ?the United Arab Emirates and ?Bahrain were damaged by drone strike, and warned of prolonged disruption.

New York Fed President John Williams is due to make remarks at 9:55 a.m., one of a trio of regional Fed speakers due to speak.

Best of the web

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Kevin Warsh's push to shrink Federal Reserve's balance sheet would evolve slowly .

The chart

Inflation is a growing problem, driven by AI demand for power and resources, says Citadel Securities' head of EMEA fixed income sales, Nohshad Shah. In a blog post, he discusses the impact on various commodities from the AI capex boom, such as surging electricity demand tightening energy markets. AI demands are also hitting other hardware markets, forcing up device prices for example. Shah added that markets and the Fed fail to understand that interest rates may need to be much higher to cope with those pressures.

Top tickers

These were the top-searched tickers on MarketWatch at 6 a.m.:

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   TSM     Taiwan Semiconductor Manufacturing 
   INFY    Infosys 
   PLTR    Palantir Technologies 
   AMD     Advanced Micro Devices 
   AMZN    Amazon 
   PLUG    Plug Power 
   NFLX    Netflix 
   XOM     Exxon Mobil 

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-Barbara Kollmeyer

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03-03-26 0939ET