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Global oil and gas markets surged this week after escalating conflict involving Iran disrupted energy production and shipping across the Middle East, threatening supplies from a region responsible for a significant share of the world’s energy exports.
Benchmark Brent crude settled at $81.40 per barrel on Tuesday, rising 4.7 percent to its highest level since early 2025. Natural gas markets reacted even more sharply, with European gas prices jumping as much as 40 percent during the trading session before easing slightly.
The price rally follows mounting disruption to energy infrastructure and shipping lanes after hostilities between Iran and U.S.-Israeli forces intensified across the Gulf. Iran has targeted vessels and energy facilities while closing navigation through the Strait of Hormuz, one of the most important oil transit routes in the world.
Roughly one fifth of global oil and liquefied natural gas supply normally moves through the strait, making the waterway a critical artery for global energy trade.
Shipping disruption tightens global supply
Traffic through the Strait of Hormuz has fallen sharply as the conflict escalates. Vessel tracking data shows tanker movements dropped dramatically after the outbreak of hostilities, with only a handful of ships transiting the strait in recent days compared with more than 20 per day earlier this year.
Hundreds of oil and LNG tankers are now stranded near major export hubs in the region, including the United Arab Emirates port of Fujairah. Many vessels remain unable to reach buyers in Asia and Europe while security risks remain elevated.
The disruption is already forcing producers and energy companies to explore alternative export routes. Saudi Aramco is attempting to reroute some crude shipments to its Red Sea export terminal at Yanbu using the kingdom’s east west pipeline.
However the pipeline has limited capacity and analysts warn it could become a target if the conflict expands across the region.
Additional infrastructure has also been affected. A drone strike hit a fuel tank at Oman’s Duqm port while fires were reported at facilities in Fujairah, slowing refuelling operations and adding further pressure to regional shipping logistics.
Production cuts ripple across Middle East energy sector
The conflict is also affecting upstream oil and gas production across several countries.
Iraq, the second largest producer within the OPEC alliance, has already begun reducing output at major fields due to difficulties transporting crude to export terminals. Officials say production at the Rumaila field has been cut by around 700,000 barrels per day while output from the West Qurna 2 field has dropped by roughly 460,000 barrels per day.
Further reductions could follow if tankers remain unable to move freely through Gulf shipping lanes.
Gas markets have also been shaken by the closure of Qatar’s liquefied natural gas facilities following security concerns earlier this week. Qatar is one of the world’s largest LNG exporters and accounts for around one fifth of global LNG supply.
The shutdown has already forced some large energy consumers to adjust operations. Chinese refiners have reportedly begun scaling back processing units while India has started rationing natural gas to industrial users as governments attempt to manage supply shortages.
The combined impact of shipping disruptions and production cuts is creating significant volatility across global commodity markets. Alongside oil and gas, prices for agricultural commodities such as sugar, soybeans and fertiliser have also climbed amid fears that transport disruptions could affect broader trade flows.
Rising energy costs raise economic and political concerns
The surge in energy prices is quickly feeding through to fuel costs for consumers.
In the United States gasoline prices have risen above $3 per gallon for the first time since November. The increase comes only weeks after political leaders celebrated a decline in fuel costs earlier this year.
Rising pump prices could carry political implications as policymakers face pressure to shield consumers from the effects of global energy shocks.
Washington is now considering several measures aimed at stabilising energy markets. Officials have indicated that the U.S. Navy could escort oil tankers through the Strait of Hormuz if necessary to maintain maritime trade. Financial guarantees and political risk insurance for shipping companies are also under discussion.
Energy analysts warn that the duration of the conflict will be critical for determining the scale of the economic impact.
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