Global energy costs soar as Iran crisis disrupts shipping, oil and gas production
Global oil and gas prices jumped on Tuesday as the U.S.-Israeli war on Iran halted energy exports from the Middle East, with Tehran attacking ships and energy facilities, closing navigation in the Gulf and forcing production stoppages from Qatar to Iraq.
Oil prices have risen more than 15% since Friday and the benchmark Brent Crude contract gained 6% on Tuesday to above $82 per barrel, the highest since July 2024, while European gas prices have soared 40% adding to a 40% surge on Monday. Sugar, fertiliser and soy prices have all risen too.
The conflict risks triggering a renewed spike in inflation that could choke off economic recovery in Europe and Asia if the war is prolonged in a region that accounts for just under a third of global oil production and almost a fifth of natural gas.
SHIPPING AT A STANDSTILL
Traffic through the Strait of Hormuz was closed for a fourth day after Iran attacked five ships, choking off a key artery accounting for about 20% of global oil and gas supply.
On Tuesday, a fuel tank at Oman’s Duqm commercial port was hit and a fire broke out at the United Arab Emirates’ Fujairah, one of the key regional oil hubs.
On Monday, Qatar shut down its liquefied natural gas facilities, some of the world’s biggest, which supply around 20% of global LNG exports, Saudi Arabia suspended production at its largest domestic refinery, while Israel and Iraq’s Kurdistan also shut chunks of their gas and oil output.
U.S. President Donald Trump launched the biggest foreign policy gamble of his presidency so far on Saturday, attacking Iran and killing Supreme Leader Ali Khamenei.
In the U.S., where gasoline prices are a key political pressure point, the cost jumped above $3 per gallon for the first time since November, just weeks after Trump touted his achievements in bringing prices down to $2.
Higher prices at the pump mark a major risk for Trump and his fellow Republicans as they head into midterm elections in November, with many Americans struggling to keep up with rising costs for daily goods.
Shipping rates around the world have also jumped to an all-time high as the conflict intensifies and Tehran targets ships passing through the strait.
The closure of the Strait of Hormuz has meant hundreds of tankers loaded with oil and LNG are stranded near big hubs, such as the UAE port of Fujairah, unable to reach customers in Asia and Europe and elsewhere.
It also means Saudi Arabia, the UAE, Iraq, Kuwait and Iran will need to begin cutting oil production within days unless they can find new tankers to transport oil that is still coming from under the ground.
