Global oil and gas prices jumped on Tuesday after attacks linked to the US-Israeli war on Iran halted energy exports from the Middle East. Tehran’s strikes on ships and energy facilities, closures of Gulf navigation and production stoppages from Qatar to Iraq forced markets higher.
Brent crude settled up $3.66, or 4.7%, at $81.40 a barrel, its strongest close since January 2025. European gas briefly rose as much as 40% before trimming gains, adding to a similar surge on Monday. Prices for sugar, fertilizer and soy have also climbed.
Analysts warned the conflict could spark inflation that undermines economic recovery in Europe and Asia if it drags on, as the region supplies nearly a third of global oil and about a fifth of natural gas. Rising energy costs could also create political risks for US President Donald Trump ahead of November midterms.
Trump said the US Navy could escort oil tankers through the Strait of Hormuz if needed, and he ordered the US International Development Finance Corporation to offer political risk insurance and financial guarantees for Gulf maritime trade — an aggressive step to try to contain soaring energy costs.
Iraq, OPEC’s second-largest producer, warned it might have to cut output by more than 3 million barrels per day within days if tankers cannot reach loading points. As of Tuesday, Iraqi officials said production had been reduced by 700,000 bpd at Rumaila and 460,000 bpd at West Qurna 2.
Shipping was effectively halted for a fourth day as Iran attacked five ships, choking the Strait of Hormuz — a route carrying roughly 20% of global oil and LNG. Crude tanker transits through the strait fell to four vessels on March 1, down from a daily average of 24 since January, according to Vortexa data; three of the four transits were Iran-flagged.
Hundreds of tankers loaded with oil and LNG are stranded near hubs such as the UAE’s Fujairah, unable to reach customers in Asia, Europe and elsewhere. Some firms are seeking alternate routes. Saudi Aramco is moving some crude to its Red Sea port at Yanbu, but sources say the east-west pipeline has limited capacity and could be vulnerable to attacks by Iran’s allies.
A fuel tank at Oman’s Duqm port was hit by a drone on Tuesday and a fire broke out at Fujairah, slowing ship refueling and potentially shifting demand to other ports like Singapore. On Monday, Qatar shut major liquefied natural gas facilities that account for about 20% of global LNG exports. Saudi Arabia suspended output at its largest domestic refinery, and Israel and Iraq’s Kurdistan region closed parts of their gas and oil production.
Chinese refiners have begun to shut units as crude supplies tighten, and India — heavily dependent on Middle Eastern energy — has started rationing gas to industry after Qatar’s production halt.
In the US, gasoline topped $3 per gallon for the first time since November, eroding a recent political talking point for Trump that prices had fallen to $2. Higher pump prices pose a significant electoral risk for Republicans ahead of the midterms.
Most Qatari LNG flows to Asia, though some supplies reach Europe, which relies entirely on imports for oil and gas. Europe faces a scramble to refill stocks depleted by a cold winter and may need to turn more to US gas after reducing dependence on Russian supplies since 2022. Shipping rates have risen to record levels as the conflict intensified and Tehran targeted vessels.
Western security experts are trying to estimate how many missiles and drones Iran still has to sustain its attack campaign. Saudi Arabia, the UAE, Oman and Kuwait have intercepted most incoming missiles and drones so far, but concerns are growing about the longevity of their anti-missile and anti-drone inventories.
