Global oil and gas markets experienced a sharp surge on Tuesday as escalating hostilities involving Iran have severely disrupted energy exports from the Middle East, sending shockwaves through international markets. The ongoing conflict between the US, Israel, and Iran has intensified, causing major interruptions in the supply chain of crucial oil and gas resources, which has heightened fears of renewed inflationary pressures across the globe.
Brent crude oil prices climbed by more than 6 percent, reaching levels above $82 per barrel — a peak not seen since July 2024. This marks a continuation of a strong upward trend, with prices having surged over 15 percent since the previous Friday. At the same time, European natural gas prices skyrocketed by 40 percent on Tuesday, following a similar steep increase the day before. These dramatic price movements reflect the growing instability in energy supply caused by the conflict.
The spike in prices has been triggered by a series of aggressive attacks orchestrated by Iran targeting commercial vessels and energy infrastructure throughout the Gulf region. The Strait of Hormuz, a vital maritime passage that facilitates roughly 20 percent of the world’s oil and gas shipments, has remained closed for the fourth consecutive day after Iran targeted five ships in the area. This closure has effectively brought shipping traffic to a halt, exacerbating supply chain disruptions and fueling market anxiety.
Adding to the turmoil, a fuel storage tank at Oman’s Duqm commercial port was struck on Tuesday, while a significant fire erupted at Fujairah in the United Arab Emirates, which is one of the region’s key oil hubs. These incidents have further strained the already fragile energy infrastructure in the Gulf, raising concerns about the resilience of supply routes in the face of ongoing hostilities.
Meanwhile, Qatar took the drastic step of shutting down its liquefied natural gas (LNG) facilities on Monday. These facilities are among the largest in the world and contribute approximately 20 percent of global LNG exports. Saudi Arabia also suspended operations at its largest domestic refinery, while Israel and the Kurdistan region of Iraq halted portions of their oil and gas production. These coordinated shutdowns have compounded the supply crunch, intensifying fears of a prolonged energy shortage.
The Middle East remains a cornerstone of global energy production, accounting for nearly one-third of the world’s oil output and close to 20 percent of natural gas production. Analysts warn that if the conflict continues unabated, it could trigger a fresh wave of inflation worldwide, potentially stalling economic recovery efforts in key regions such as Europe and Asia. The disruption in energy supplies threatens to push prices even higher, impacting everything from transportation costs to manufacturing expenses.
In the United States, the impact of rising energy costs is already being felt, with gasoline prices surpassing three dollars per gallon for the first time since November. This increase comes just weeks after former President Donald Trump touted declining fuel prices as a significant economic achievement. The surge in pump prices could pose political challenges for Trump and the Republican Party ahead of the November midterm elections, as voters face mounting living expenses.
In response to the crisis, US Treasury Secretary Scott Bessent and Energy Secretary Chris Wright are preparing to announce measures aimed at alleviating the impact of soaring oil prices. These steps are expected to focus on stabilizing the market and ensuring energy availability, as officials seek to mitigate the economic fallout from the conflict.
The repercussions of the supply disruptions are being felt acutely in Asia and Europe. India, which relies heavily on Middle Eastern energy imports, has already begun rationing gas supplies to its industrial sector following Qatar’s production halt. Most of Qatar’s LNG exports are destined for Asian markets, though Europe also depends on these shipments to meet its energy needs.
Europe, in particular, faces a challenging winter ahead. The continent has been working to rebuild its energy reserves after a harsh winter season depleted stocks. Since reducing its dependence on Russian gas following Moscow’s invasion of Ukraine in 2022, Europe has increasingly turned to US gas imports. The current crisis threatens to disrupt this delicate balance, forcing European nations to scramble for alternative sources to meet demand.
The closure of the Strait of Hormuz has also created a bottleneck for hundreds of oil and LNG tankers stranded near critical ports such as Fujairah. This backlog is preventing shipments from reaching customers in Asia and Europe, raising the possibility that energy exporters including Saudi Arabia, the UAE, Iraq, Kuwait, and Iran may be compelled to reduce production if alternative shipping routes cannot be secured promptly.
Meanwhile, Western security analysts are closely monitoring Iran’s capacity to sustain its missile and drone attacks on energy infrastructure. Although Gulf states have successfully intercepted most of the projectiles aimed at ports, refineries, and airports, there is growing concern that their air defense systems could be depleted if the conflict continues for an extended period. The ongoing hostilities underscore the fragility of the global energy supply chain and highlight the geopolitical risks that can rapidly escalate into economic crises.
