Washington/ London, 3 March: Global energy markets were jolted Tuesday as escalating conflict in the Middle East disrupted production and shipping routes, sending gas prices soaring, oil sharply higher and equities tumbling worldwide.
UK wholesale gas prices surged more than 46% to 165p per therm — their highest level in three years — while the Dutch benchmark contract climbed 41% to €45 per megawatt hour. Traders cited mounting fears of prolonged supply interruptions after attacks on key infrastructure in the Gulf.
Brent crude briefly rose above $85 a barrel before easing back to the $77–$82 range, leaving prices about 17% higher than last week’s close. Analysts warned that a sustained disruption could push oil beyond $100 a barrel, with knock-on effects for fuel and food costs globally.
Gold advanced more than 2% as investors shifted toward safe-haven assets. Meanwhile, freight rates for oil tankers spiked dramatically. Chartering a supertanker from the Middle East to China reportedly exceeded $400,000 per day — nearly double the previous week — as insurers and shipping firms reassessed risks.
Strait of Hormuz Under Strain
At the heart of the market turmoil is the Strait of Hormuz, a narrow waterway through which roughly one-fifth of the world’s oil and gas supplies pass.
Shipping traffic has slowed sharply following reported vessel attacks, with some carriers pausing transit amid safety and insurance concerns. The International Maritime Organization urged ships to exercise caution and avoid the region where possible.
An adviser to Iran’s Islamic Revolutionary Guard Corps, Ebrahim Jabbari, warned on state television:
“Ships should not come to this region. They will certainly face a serious response from us.”
LNG Supply Shock
Further pressure came after QatarEnergy suspended liquefied natural gas (LNG) production at facilities in Ras Laffan and Mesaieed following reported attacks. The company said it would continue to update stakeholders but did not specify a timeline for resuming operations.Market participants estimate the disruption could temporarily affect nearly 20% of global LNG supply. Qatar accounts for about 6.5% of the UK’s LNG imports, raising concerns over further volatility in European gas markets. Production of aluminium, methanol and fertiliser feedstocks has also been halted.
Markets Slide, Defence and Oil Stocks Gain
Equity markets reacted swiftly. The Dow Jones Industrial Average dropped nearly 900 points at the open, while London’s FTSE 100 fell as much as 2.6%. Germany’s DAX and France’s CAC 40 each declined around 3%, and Asian markets also registered steep losses, with South Korea’s Kospi down more than 7%.
Airlines and travel firms were among the worst performers, reflecting fears of higher jet fuel costs and regional airspace disruptions. By contrast, oil majors and defence manufacturers posted gains as investors rotated into sectors expected to benefit from higher crude prices and geopolitical tensions.
Inflation Fears Reignite
Economists cautioned that sustained energy price increases could filter through to household bills, transport costs and food prices, potentially complicating central bank plans to ease monetary policy later this year.
In the UK, analysts estimate petrol prices could approach 136p per litre if oil stabilises around $80 a barrel, and near 150p should crude climb toward $100. In the United States, forecourt prices could rise by as much as 25 cents per gallon under similar conditions.
US Secretary of State Marco Rubio acknowledged the economic risk, saying Washington would outline measures to cushion consumers from rising energy costs. President Donald Trump signalled military operations could continue for weeks, adding to uncertainty in global markets.
Shipping and Insurance Disruptions
Major shipping lines, including Maersk, have suspended transit through the Strait of Hormuz and the Suez Canal, citing safety concerns. Insurance providers are reportedly reassessing coverage in the region, a move that could further drive up transport costs.
Analysts at Wood Mackenzie described the situation as a “dual supply shock,” noting that not only are current exports constrained, but additional output from OPEC+ producers may be unable to reach global markets if maritime routes remain unsafe.
Broader Economic Risks
The unfolding crisis has revived memories of the energy shock triggered by Russia’s invasion of Ukraine, which drove global inflation to multi-decade highs.
Should disruptions persist, the chain reaction is clear: elevated energy prices could stoke inflation, delay interest rate cuts and weigh on global growth at a time when many economies are already fragile.
For now, traders remain focused on developments in the Gulf — and whether one of the world’s most vital energy corridors can be stabilised before temporary disruption becomes a prolonged economic shock.
