Oil prices rose more than 15% to $84 after Iranian strikes on Qatari LNG facilities, while European gas prices rose more than 30%.
Global energy markets have come under pressure as the Middle East conflict escalates, with concerns rising about possible disruptions to oil and gas supplies.
US and Israeli attacks on Iran have prompted Tehran to retaliate with missile and drone attacks on Israeli and US bases. Iran has targeted oil facilities in neighboring countries, but shipping through the Strait of Hormuz, a narrow gateway at the mouth of the gulf, has been largely halted. The waterway between Iran and Oman, only 32km (20 miles) at its narrowest point, is a critical chokepoint, carrying roughly 20% of the world’s oil exports.
Is oil price in a wider war?
Oil prices, up more than 15% since the conflict began, extended gains on Tuesday as the US-Israeli standoff with Iran and threats to shipping through the Strait of Hormuz raised fears of widespread supply disruptions. Brent crude oil briefly topped $84 per barrel in early trading on Tuesday, the highest level since mid-2024. The benchmark touched $82.37 in the previous session – its highest level since January 2025 – before trimming some gains.
Traders are now pricing in a significant risk premium amid concerns that escalating military measures could restrict flows from major Gulf producers. Some analysts are warning that prices could test $90 per barrel if the pipeline is disrupted.
Is Europe facing a fresh gas shock?
Natural gas prices rose even more dramatically, with European benchmark TTF futures jumping more than 30% on Tuesday, surpassing $700 per 1,000 cubic meters, the highest level since January 2023. Iran follows up with a retaliatory strike on Qatari liquefaction facilities. Absolutely. With roughly 20% of global LNG trade through the Strait of Hormuz and Qatar’s export corridor with no bypass capacity, analysts warn of severe supply tightness.
Goldman Sachs raised its April TTF forecast and warned that a temporary disruption could push up European gas prices sharply, with longer outages risking more severe spikes. European storage levels are currently below their seasonal averages, leaving the region exposed to continued supply losses.
Wholesale gas prices in the UK have risen by 93%, according to Sky News, with analysts warning that rising gas prices will have a knock-on effect on the cost of renewable and nuclear energy. Analysts say the current spike is smaller than that of 2022 – when Russian gas cuts will send energy bills skyrocketing – and it is still set to hit consumers across Europe, as gas is central to power generation. Such a scenario would boost Russian exporters and help the budget, but also increase volatility.
Read more:
How much damage has Iran done to US bases in the Middle East?
How does the Strait of Hormuz affect energy flows?
Although Iran did not formally close the Strait of Hormuz over the weekend, its threats effectively halted shipping. Anxiety among oil and shipping companies – and their insurers – brought traffic to a standstill.
Brigadier General Ibrahim Jabbari, a senior adviser to the Islamic Revolutionary Guard Corps commander-in-chief, told state television on Monday: “Ships should not come to this area. They will definitely face a serious response from us. The Strait of Hormuz is closed. We will attack and set fire to any ship that tries to cross.” Oil pipelines can also be targeted and Iran will not allow it, he said “a drop of oil” To leave the area.
The disruption has not only pushed up global fuel prices but also sent shipping costs skyrocketing. The charter rate for a supertanker carrying oil from the Middle East to China hit a record $400,000 on Monday.
Ship tracking data shows tanker traffic through the Gulf has largely ground to a halt, with hundreds of ships — dozens of crude carriers moving millions of barrels — anchored or idled on either side of the strait. Operators are avoiding the area amid attacks and threats, with some of the biggest crude carriers representing just over 2 million barrels each waiting for the situation to ease. Experts say a prolonged shutdown is unlikely, but continued disruption could push oil prices into triple digits.
Are global markets slipping into risk-off mode?
Stocks fell across Europe and Asia on Tuesday as the Middle East conflict and soaring energy prices rattled investors. The Dow fell 1,100 points in early trading Tuesday as Wall Street fears of a protracted war with Iran. Europe’s STOXX 600 extended losses for a second day, while Germany’s DAX and France’s CAC 40 fell sharply and London’s FTSE 100 hit a two-week low.
Asian markets are worse. South Korea’s KOSPI fell more than 7% in its steepest decline in months as foreign investors dumped stocks, while Japan’s Nikkei also posted heavy losses amid broader risk aversion.
How has the Russian market reacted to the escalating conflict?
Geopolitical tensions boosted Russian energy companies, whose shares rose 3-12%. Analysts expect a narrowing of the discount on Russian Urals crude and increased demand for liquefied natural gas (LNG).
“In this background, oil forecasts above $100 no longer look minimal” Yaroslav Kabakov, strategy director of Finam Group, told RBC on Tuesday. If the surge continues, Brent could trade between $85 and $95 per barrel in the coming weeks, with $100 or more possible in the event of a true blockade. Such a scenario would boost Russian exporters and help the budget, but also increase volatility.
Russia’s main stock exchange, MOEX, rose nearly 1.3% on Tuesday, rising to its highest level since late 2025, led by energy stocks. Tatneft rose about 11%, Rosneft 8.3% and Lukoil 5.7%, while Novatek gained about 5%. Other oil-linked names Surgutneftegaz and Gazprom Neft also advanced.
You can share this story on social media:
