Gas and oil prices surged sharply on Tuesday as the conflict in the Middle East escalated, while global stock markets tumbled amid mounting concerns over the duration and economic impact of the crisis.
UK wholesale gas prices rose more than 46% in early trading, reaching levels not seen in three years. Prices peaked at 165p per therm before easing slightly to 146p by early afternoon. The surge followed QatarEnergy’s announcement that it would halt liquefied natural gas (LNG) production after its facilities at Ras Laffan and Mesaieed were hit in recent military attacks. The company also suspended output of aluminium, methanol, and urea used for fertiliser.
Brent crude briefly traded above $85 a barrel, up 17% since Friday, while US West Texas Intermediate crude rose to $76.26. Analysts noted that oil markets have more flexibility in sourcing supply compared to gas, but rising crude prices are still likely to push up transport, motor fuel, and food costs globally.
Markets reacted sharply. In London, the FTSE 100 fell 2.6%, Germany’s DAX dropped 3.6%, and France’s CAC-40 slid 2.9%. In the US, the Dow Jones Industrial Average fell nearly 900 points at the open, while the S&P 500 and Nasdaq also declined. Asian markets were similarly affected: Japan’s Nikkei closed 3.3% lower, Hong Kong’s Hang Seng and Shanghai Composite fell, and South Korea’s Kospi dropped more than 7% after reopening from a public holiday.
The conflict has disrupted shipping through the Strait of Hormuz, a critical passage for roughly 20% of global oil and gas. Ebrahim Jabbari, an adviser to Iran’s Revolutionary Guard, warned that ships entering the area would face a “serious response.” Tanker rates have spiked, with the cost of hiring a supertanker from the Middle East to China reaching a record $400,000 per day, nearly double last week. Insurance providers have largely withdrawn coverage for vessels in the region, contributing to higher transport costs.
Analysts warned that prolonged disruption could push Brent crude above $100 a barrel, raising US petrol prices by up to 25 cents per gallon. In the UK, high oil costs are likely to filter through to pump prices, though the impact on household energy bills will be delayed until the July update of the price cap.
US officials are closely monitoring the situation. President Trump is scheduled to meet Treasury Secretary Scott Bessent and Energy Secretary Chris Wright to discuss rising costs, while Secretary of State Marco Rubio said Washington would announce measures to mitigate energy price spikes.
The combination of surging energy prices and market uncertainty has revived concerns about inflation and interest rates, drawing comparisons to the 2022 energy shock following Russia’s invasion of Ukraine. Traders are watching the Strait of Hormuz and regional developments closely, as the scale and duration of the conflict remain the key determinants of global economic and energy market stability.
