Energy Prices Explode as Iran Conflict Blocks World’s Oil and Gas Arteries

Energy prices across the world exploded higher on Monday as the escalating military conflict involving Iran blocked or severely disrupted two of the most critical arteries through which the world’s oil and gas supplies flow. The European benchmark gas price surged 41% in a single trading session, UK gas prices rose 40%, and oil climbed to a 14-month high, as markets priced in the full severity of a supply disruption that energy analysts described as exceptional in both its scale and its breadth.
The first artery to be disrupted was the Strait of Hormuz, the narrow waterway separating the Arabian Peninsula from Iran through which approximately one-fifth of global oil supplies and a substantial share of global LNG shipments pass. Following US and Israeli military strikes over the weekend, Iran reportedly warned all tankers that no vessels would be permitted to transit the strait. Two commercial ships were subsequently attacked in the waterway, one near Oman and another near the United Arab Emirates. Marine tracking systems confirmed that tankers were piling up on both sides of the strait, unable or unwilling to attempt the dangerous passage. The International Maritime Organisation urged all shipping companies to exercise maximum caution and called on vessels to avoid the affected region.
The second disruption hit the global LNG supply chain directly, when Qatar’s state-owned energy company announced it had suspended production at the Ras Laffan and Mesaieed facilities following drone attacks. Qatar is among the world’s most important LNG exporters, and the shutdown of its production could remove close to 20% of global LNG supply from the market. The loss falls particularly heavily on Asian buyers who depend on Qatari LNG under long-term supply contracts, but its effects are felt across all global gas markets simultaneously. European gas prices surging 41% to 45 euros per megawatt hour and UK gas prices jumping 40% to 110p a therm illustrated the immediate and severe global market response to the supply shock.
The third disruption, less immediately visible but equally consequential, was the effective suspension of commercial shipping through both the Strait of Hormuz and the Suez Canal. Major shipping company Maersk announced on Sunday that it was halting all transits through both waterways for safety reasons, citing the attacks on commercial vessels and the deteriorating security environment in the region. The Suez Canal, which connects the Indian Ocean with the Mediterranean and is used for significant volumes of LNG and other commodity shipments, is a critical link in global energy supply chains. Its simultaneous disruption alongside the Hormuz closure creates a compounding challenge for global trade and energy logistics.
Financial markets worldwide fell sharply in response to the breadth and severity of the crisis. Stock markets in Europe, the United States, and Asia all declined, with aviation companies and energy-intensive industries bearing the heaviest losses. Airlines suffered particularly painful falls as thousands of flights were cancelled and jet fuel costs surged. IAG, the parent company of British Airways, fell 6% while easyJet declined 4%. In contrast, oil companies and defence manufacturers outperformed the market, reflecting the commercial benefit that higher crude prices and increased military spending provide to those sectors. Gold rose 2.5% to 5,408 dollars an ounce as investors sought safety. Fuel analysts warned UK motorists that petrol prices, already on a rising trend, could approach 150p per litre if oil reaches 100 dollars a barrel, adding a direct and personal dimension to a crisis playing out in distant but deeply consequential corners of the globe.