London, 2 March: Global energy markets jolted on Monday as escalating conflict in the Middle East rattled oil shipping routes and raised fresh concerns over inflation and economic stability.
Benchmark Brent crude climbed as much as 13% in early trading, briefly moving above $82 per barrel before retreating to around $79. US crude rose between 7% and 8% to roughly $72.20. European natural gas futures spiked up to 25% amid fears that liquefied natural gas (LNG) exports from Qatar could be disrupted.
Investors shifted toward traditional safe-haven assets, pushing gold prices more than 2% higher to near $5,395 an ounce. Meanwhile, equity markets weakened across Europe. London’s FTSE 100 slipped nearly 1%, while France’s CAC-40 fell 1.6% and Germany’s DAX declined 1.7%. The broader Stoxx Europe 600 dropped 1.3%, with airline and hotel shares leading losses amid renewed airspace restrictions and travel disruptions.
Shipping Disruption at a Strategic ChokepointThe Strait of Hormuz — a narrow corridor through which roughly 20% of global oil and gas supplies pass — has become the focal point of market anxiety.
At least 150 oil tankers were reported anchored outside the strait as insurers began withdrawing coverage following security incidents. Iran warned commercial vessels against transiting the waterway, and maritime authorities confirmed that two ships were struck while an unidentified projectile exploded near a third.
“Because of Iran’s threats, the strait is effectively closed,” said Homayoun Falakshahi of ship-tracking firm Kpler, highlighting the scale of disruption to global trade flows.
Energy Infrastructure Drawn Into ConflictIn a significant escalation, a drone strike forced the temporary shutdown of Saudi Arabia’s Ras Tanura refinery — one of the kingdom’s largest processing facilities, capable of handling 500,000 barrels per day and serving as a major export terminal.
“It’s a huge escalation,” said Saudi analyst Ali Shihabi, suggesting the attack could widen the conflict’s regional footprint.
Torbjorn Soltvedt of risk consultancy Verisk Maplecroft warned that Gulf energy infrastructure now appears to be directly in the line of fire, raising concerns about sustained supply disruptions.
Inflation Risks Re-Emerge
Analysts caution that if tensions persist and shipping constraints remain unresolved, oil prices could climb above $100 per barrel. Such a move would likely feed rapidly into global petrol prices and broader consumer costs.
“The jump in prices will feed through almost immediately,” said Robin Mills of Qamar Energy. Others stressed that energy inflation could spill over into food, agricultural goods, and industrial commodities, complicating central bank policy decisions at a time when inflation has only recently begun to moderate.
However, some experts note that markets are not yet pricing in a full-scale supply shock. “The market isn’t panicking,” said energy strategist Saul Kavonic, pointing out that core production facilities have so far avoided widespread damage.
Norbert Rücker of Julius Baer added that the most severe risk is not merely the closure of the Strait of Hormuz, but significant harm to key oil and gas infrastructure across the Gulf.
Supply Measures and Strategic Buffers
In response to mounting volatility, OPEC+ agreed to raise output by 206,000 barrels per day in an effort to stabilize prices. Saudi Arabia may also reroute some exports through pipelines leading to the Red Sea, bypassing Hormuz. Meanwhile, China’s recent stockpiling — estimated at close to one million barrels per day over recent months — could provide a temporary cushion against supply interruptions.
Market Outlook
While energy markets remain volatile, analysts say the situation has not yet reached crisis levels. The decisive factor will be whether maritime traffic resumes and whether further strikes target production or export facilities.
For now, investors are bracing for continued uncertainty, as the stability of one of the world’s most critical energy corridors hangs in the balance.
