KEY POINTS
- European gas prices jumped 41% after Qatar halted LNG production following attacks on key facilities.
- Oil briefly hit a 14 month high as fears grew over disruptions in the Strait of Hormuz.
- Global stock markets fell sharply, while gold and defense shares climbed on safe haven demand.
Gas and oil prices jumped sharply Monday after attacks linked to the escalating US and Israeli military campaign against Iran forced Qatar to halt liquefied natural gas production, sending shockwaves through global markets.
European gas prices surged by more than 40%, oil briefly touched a 14 month high and stock markets tumbled from London to Tokyo as traders reacted to fears of prolonged supply disruptions in the Middle East.
State owned QatarEnergy said it suspended liquefied natural gas production after a drone strike targeted facilities in Ras Laffan. Qatar’s defense ministry confirmed the attack and said there were no casualties.
The shutdown affects operations at Ras Laffan and Mesaieed, key hubs in one of the world’s largest LNG exporting nations. Qatar is a major supplier to Europe and Asia, and any disruption quickly tightens global supply.
The Dutch benchmark day ahead gas contract jumped 41% to €45 per megawatt hour, up from €32 on Friday. In the UK, wholesale gas rose about 40% to 110p per therm.
Energy analysts warned the closure could temporarily remove close to a fifth of global LNG supply from the market, a serious blow at a time when countries are still recovering from the 2022 energy crisis.
Jess Ralston of the Energy and Climate Intelligence Unit said the spike is a troubling sign that household and business energy bills could rise again in Britain.
Oil markets were equally shaken
Brent crude surged as much as 13% in early trading to hit $82 a barrel, its highest level in 14 months, before easing slightly to trade near $77, still up almost 6% on the day.
Much of the anxiety centers on the Strait of Hormuz, the narrow waterway between Iran and Oman through which roughly a fifth of the world’s oil and significant volumes of liquefied gas pass.
Following weekend strikes by the United States and Israel on Iranian targets, Tehran reportedly warned ships transiting the strait. Two vessels were attacked near Oman and the United Arab Emirates, according to United Kingdom Maritime Trade Operations.
Marine tracking data showed tankers stacking up on either side of the strait, as shipowners weighed security risks and insurance concerns.
The International Maritime Organization urged caution, with Secretary General Arsenio Dominguez calling on shipping companies to avoid the area where possible.
Shipping giant Maersk said it was suspending passage through both the Strait of Hormuz and the Suez Canal due to safety concerns.
Analysts said oil could climb above $100 a barrel if the waterway remains restricted.
