Global oil shock as Iran conflict wipes out up to 40% of Gulf refining capacity

WEB DESK: France’s Finance Minister Roland Lescure has warned of a severe global energy crisis after Iran’s retaliatory strikes damaged or destroyed between 30 and 40 per cent of Gulf refining capacity, removing an estimated 11 million barrels per day from world oil markets.

Speaking on Wednesday, Mr Lescure said the disruption one of the largest in history could take up to three years to fully repair, with several months needed simply to restart facilities that were shut down as a precaution, according to France24.

The strikes, part of escalating tensions following US-Israeli actions against Iran, have hit infrastructure across the region, including refineries in Saudi Arabia, Kuwait and other Gulf states.

The shortfall has sent shockwaves through energy markets, with oil and gas prices surging and raising fears of prolonged economic pain worldwide.

Italy turns to Algeria amid lost Qatari LNG

In a sign of the scramble for alternatives, Italian Prime Minister Giorgia Meloni travelled to Algeria on Wednesday for emergency talks aimed at securing increased gas deliveries to replace lost supplies from Qatar.

Italy, which relies heavily on natural gas for electricity generation, is working with its energy giant ENI and Algerian partner Sonatrach on projects including shale gas and offshore exploration to boost flows. Similar efforts are under way across Europe as nations seek to offset the impact of disrupted Middle Eastern supplies.

Meanwhile, the UK and Germany have indicated that the crisis is hastening their shift away from fossil fuels towards renewables and other low-carbon sources.

Officials in both countries described the situation as a “wake-up call” that underscores the risks of dependence on volatile imported energy.

European Central Bank President Christine Lagarde sought to reassure markets, saying the ECB has “several options” to address the resulting inflation shock and would not be “paralysed by hesitation”. Policymakers are closely monitoring the situation, with businesses potentially passing on higher costs more quickly than in previous crises.

The developments come as analysts warn the conflict could reshape global energy policy for years, with calls for faster investment in grid modernisation, renewables and diversified supplies gaining urgency across the continent.

Economists caution that while some facilities may come back online relatively soon, the full restoration timeline means higher energy prices and potential inflationary pressures could persist, testing both households and industries.