Global energy markets jumped sharply after attacks tied to the widening US‑Israeli conflict with Iran interrupted shipping and production in the Middle East. Brent crude rose $3.66, or 4.7%, to settle at $81.40 a barrel — its strongest close since January 2025 — while European gas spiked as much as 40% before trimming gains. Commodities such as sugar, fertilizer and soy also climbed amid supply worries.
Traders and analysts warned the disruption could feed inflation and slow economic recoveries in Europe and Asia if it continues. The Middle East remains a major source of global supply, and higher energy costs would ripple through manufacturing, freight and food prices. Policymakers are also watching the political fallout: higher pump prices in the US could complicate messaging for President Donald Trump ahead of November midterms.
In response to the turmoil, Mr. Trump said the US Navy could escort oil tankers through the Strait of Hormuz if necessary and directed the US International Development Finance Corporation to provide political risk insurance and financial guarantees to support Gulf maritime trade.
Iraq, OPEC’s second‑largest producer, warned it might be forced to cut output by more than 3 million barrels per day within days if tankers cannot reach loading points. As of Tuesday, Iraqi officials reported reductions of about 700,000 bpd at Rumaila and 460,000 bpd at West Qurna 2.
Shipping was effectively halted for a fourth day after Iran struck five vessels, choking the Strait of Hormuz — a chokepoint that handles roughly 20% of global oil and LNG flows. Crude tanker transits through the strait fell to just four vessels on March 1, down from a daily average of 24 since January, with three of the transits reportedly Iran‑flagged, according to Vortexa.
Hundreds of tankers loaded with oil and LNG are stranded near regional hubs such as the UAE’s Fujairah, unable to reach buyers in Asia, Europe and elsewhere. Some companies are rerouting cargoes where possible. Saudi Aramco is shifting some crude to its Red Sea port at Yanbu, but sources say the east‑west pipeline has limited capacity and could be vulnerable to attack.
The disruption has included direct hits on port and fuel infrastructure: a fuel tank at Oman’s Duqm port was struck by a drone and fires at Fujairah slowed bunkering operations, potentially pushing demand toward other refueling hubs such as Singapore. Qatar halted major LNG facilities that together account for about 20% of global LNG exports, Saudi Arabia suspended output at its largest domestic refinery, and parts of oil and gas production were closed in Israel and Iraq’s Kurdish region.
The supply squeeze is already affecting refiners and industrial users. Chinese refiners have begun shutting units as crude availability tightens, and India — heavily dependent on Middle Eastern energy — has started rationing gas to industry following Qatar’s production halt. In the US, average gasoline prices topped $3 per gallon for the first time since November, removing a recent political talking point about lower pump prices.
Europe, which imports virtually all its oil and gas and is still rebuilding stocks after a harsh winter, faces a scramble to replenish inventories and may need to lean more on US LNG after reducing reliance on Russian supplies since 2022. Shipping rates have climbed to record levels as insurers and charterers factor in higher risk.
Western security analysts are racing to estimate how many missiles and drones Iran retains to sustain further strikes. Regional defenses in Saudi Arabia, the UAE, Oman and Kuwait have intercepted much of the incoming barrage so far, but officials worry about how long anti‑missile and anti‑drone stocks can be sustained if attacks continue.
