Global energy prices surge as Iran war disrupts oil, gas supply

LONDON: Global oil and gas prices surged on Tuesday as the ongoing US-Israeli war on Iran severely disrupted energy exports from the Middle East, rattling global markets and raising fears of renewed inflation.

Brent crude rose more than 6 per cent to trade above 82 dollars per barrel — its highest level since July 2024 — extending gains of over 15 per cent since Friday. European gas prices also soared 40 per cent on Tuesday, adding to a similar spike a day earlier.

The sharp rally followed escalating attacks by Iran on ships and energy facilities across the Gulf, the closure of the Strait of Hormuz for a fourth consecutive day, and production shutdowns from Qatar to Iraq.

Hormuz closure halts shipping

Traffic through the Strait of Hormuz — a critical maritime chokepoint that handles about 20 per cent of global oil and gas supply — has come to a standstill after Iran targeted five vessels.

On Tuesday, a fuel storage tank was struck at Oman’s Duqm commercial port, while a fire broke out at Fujairah in the United Arab Emirates, one of the region’s major oil hubs.

On Monday, Qatar shut down its liquefied natural gas (LNG) facilities — among the world’s largest — which account for roughly 20 per cent of global LNG exports. Saudi Arabia also suspended operations at its largest domestic refinery. Meanwhile, Israel and Iraq’s Kurdistan region halted portions of their gas and oil production.

Inflation fears return

The Middle East accounts for nearly one-third of global oil production and almost a fifth of natural gas output. Analysts warn that a prolonged conflict could trigger a renewed surge in inflation, potentially choking economic recovery in Europe and Asia.

In the United States, gasoline prices rose above three dollars per gallon for the first time since November. The increase comes weeks after President Donald Trump highlighted falling fuel prices as a major economic achievement.

Rising pump prices could pose political risks for Trump and fellow Republicans ahead of midterm elections in November, as Americans grapple with higher living costs.

US Treasury Secretary Scott Bessent and Energy Secretary Chris Wright are expected to unveil measures aimed at mitigating the impact of soaring oil prices, according to Secretary of State Marco Rubio.

Asia and Europe feel the strain

India, heavily dependent on Middle Eastern energy imports, has begun rationing gas supplies to industries following Qatar’s production shutdown.

Most Qatari LNG shipments are destined for Asia, though Europe also relies on them. Europe, already dependent on imports for oil and gas, is expected to scramble to rebuild reserves depleted by a harsh winter. The region has increasingly turned to US gas after reducing reliance on Russian supplies following Moscow’s 2022 invasion of Ukraine.

Tanker shortages threaten output cuts

The Hormuz closure has stranded hundreds of oil and LNG tankers near key ports such as Fujairah, preventing shipments to customers in Asia and Europe.

Energy exporters including Saudi Arabia, the UAE, Iraq, Kuwait and Iran may be forced to cut production within days unless alternative shipping arrangements are secured.

Meanwhile, Western security analysts are assessing how long Iran can sustain missile and drone attacks. Gulf states have intercepted most projectiles targeting energy infrastructure, ports and airports, but concerns are growing that air defence stockpiles could be depleted if hostilities persist.