Global energy markets were jolted on Tuesday after an Iranian official warned that any vessel attempting to pass through the Strait of Hormuz would be met with force—raising fears of a major disruption to one of the world’s most critical shipping lanes.
Gas prices spiked sharply, while stock markets across Europe fell, as investors reacted to the risk of prolonged conflict involving Iran, the United States, and Israel.
Gas and Oil Jump to Multi-Year Highs
UK wholesale gas prices surged more than 46%, briefly hitting their highest level in three years before easing later in the day. Prices have now doubled since air strikes on Iran began over the weekend.
Oil markets also climbed, though less dramatically. Brent Crude rose more than 5% to just over $81 a barrel.
One key driver was QatarEnergy, one of the world’s largest gas exporters, which suspended production after reporting military attacks on its facilities. The company later said it would also halt output of aluminium, methanol and urea—materials vital for industry and fertiliser production.
Stock Markets Retreat
European markets fell sharply as investors weighed the economic fallout from rising energy costs.
Although markets recovered some ground by the afternoon, losses remained significant.
Inflation Fears Return
Economists warn that sustained increases in gas and oil prices could reignite inflation pressures—echoing the shock seen after Russia’s invasion of Ukraine, which sent global energy bills soaring.
Higher fuel and transport costs tend to feed into food prices and broader consumer inflation. If inflation accelerates, central banks may delay or abandon plans to cut interest rates later this year.
In the UK, household energy bills are shielded in the short term by a government price cap, which remains in place until July.
Shipping Disruption Raises Global Stakes
Around 20% of the world’s oil and gas passes through the Strait of Hormuz, making it one of the most strategically important waterways on Earth. In recent days, several vessels have reportedly been attacked, causing shipping traffic to grind to a halt.
Ebrahim Jabbari, an adviser to Iran’s Islamic Revolutionary Guard Corps, warned on state television that ships entering the region would face a “serious response”.
The risk has also driven up transport costs. According to London Stock Exchange Group, the daily cost of hiring a supertanker to ship oil from the Middle East to China surged to more than $400,000 on Monday—almost double last week’s rate.
