Middle East: the systemic event shaking markets and insurers

The Middle East systemic event won't be fixed by a ceasefire

The war in the Middle East has ceased to be a regional conflict and has become a systemic event with direct effects on the Gulf's energy infrastructure. Ports, refineries and gas terminals in Saudi Arabia, Qatar, the Emirates, Iraq, Iran and Kuwait have suffered massive damage, and the Strait of Hormuz has been operating at half capacity for weeks. This is not a temporary rise in the price of a barrel: it is the possibility that part of production will be physically lost forever.

The treacherous physics of oil

Oil is not in an underground lake. It is trapped in porous rock, like a sponge soaked under pressure. For it to come out, the well needs to maintain that pressure and a constant flow. If extraction stops suddenly, the salt water below rises and the pressure falls. When trying to reopen, the reservoir no longer responds with the same yield: part of the reserves remains underground, unrecoverable.

That is the scenario being repeated in dozens of wells in the Gulf. It is not a logistical problem of reopening a tap; it is physical damage that, according to the most detailed calculations, can permanently disable infrastructure that took decades to build.

The bottleneck is not crude: it is gas and its derivatives

The most urgent shortage is not crude, but derived products such as kerosene and ship fuel oil. Gas, for its part, is hitting a critical link: fertilizers. The Pearl GTL complex of QatarGas is in flames, and the destruction of its air separation units, manufactured by Linde and SIAD in Italy, represents a cost of about 1,000 million dollars per unit and a manufacturing lead time of 3 to 4 years. The impact on the next global harvest is guaranteed.

The International Energy Agency has confirmed that the energy crisis triggered by this war surpasses, in severity, the oil crises of the 1970s and the gas crisis of 2022 combined. It is not a prediction; it is a documented fact.

The insurance bill and the financial domino effect

The next domino is insurance. Force majeure clauses will be activated at Lloyd's, with claims approaching 270,000 million dollars. That will force Gulf sovereign wealth funds to sell assets on Western stock exchanges to pay for reconstruction. The global financial system was sustained on the fiction that those assets would have a perpetual buyer; now the wind is blowing against it.

Some argue that the system will hold because no one is interested in total chaos. Others recall that financial engineering built a house of cards on the most unstable region on the planet. Oil at 150 dollars would push inflation and interest rates to levels impossible to pay for several countries. The ladder of sovereign bankruptcies is a real scenario, not a musing of alarmist economists.

Spain: tourism as oil

For Spain, the impact filters through tourism. Expensive fuel and skyrocketing plane tickets will reduce visitors' disposable income. If external demand falls, tourist apartments will return to the traditional rental market, supply will increase and prices will fall. The shopping basket, due to more expensive fertilizers and transport, will rise sharply. Some joke that maybe this way we can summer in Mallorca by ferry without going broke; the reality is that the middle class will see its purchasing power reduced in both directions.

Official figures don't add up

The disconnect between the narrative and the data is brutal. Trump even claimed that 100 million barrels had been taken out through the strait; CNN published that the real figure was 900,000 barrels. A few days later, two oil tankers with 2 million barrels each crossed Hormuz. That is 10% of what should circulate under normal conditions. Meanwhile, the media repeat that the ceasefire will restore the flow, when lost production is not recovered even if ships set sail again.

The inflation peak, according to market projections, will not arrive until late 2026 or early 2027, with a level close to 10% if the war stops. If it does not stop, the ceiling is unpredictable. The damage to the economy is already done; what is not known is how far the flood will reach.