Oil and Gas Prices Surge as Middle East Tensions Hit Supply Routes

Commodity markets have jumped sharply on Monday, with energy prices leading the rally after escalating conflict involving Iran raised fears of major disruption to global oil and liquefied natural gas (LNG) supplies.

Update (02/03/2026, 14:50): The price of European LNG surged by more than 50% after Qatar’s state-owned energy company QatarEnergy said it had halted operations at its two main processing sites following a drone attack attributed to Iran. After rising around 20% in morning trading-at US$38 per contract-LNG prices later climbed above US$47.

Oil Jumps After US and Israeli Strikes on Iran

Oil prices also climbed steeply on Monday 2 March, after US and Israeli strikes against Iran. The benchmark Brent crude briefly moved above US$80 a barrel before easing back to around US$78 at the time of reporting. WTI also advanced strongly.

Market moves reflected mounting concern that the crisis could widen or drag on, potentially tightening supply and pushing prices higher still. Analysts warn that a prolonged escalation could weigh on economic growth and reignite inflation pressures, echoing the shock that followed Russia’s invasion of Ukraine. Three years ago, that conflict helped drive the TTF natural gas contract to above US$350.

European Gas Market Rattled, Even as Volatility Is Familiar

In Europe, gas prices jumped at the open, with the Dutch TTF benchmark rising 22%. Traders are increasingly focused on whether LNG exports-particularly from Qatar-could be curtailed, potentially limiting supply.

Even so, some observers caution that gas markets can move sharply for other reasons, including weather. A single cold snap in Europe can trigger similarly abrupt spikes, as seen in February when the TTF futures also jumped to around US$39.

Shipping Warnings and Attacks Intensify Supply Fears

Sentiment deteriorated further after Iran attacked two vessels on Sunday off the coasts of Oman and the United Arab Emirates, according to reports carried by BFM. The International Maritime Organization (IMO) urged shipping companies to avoid the area, a message that was rapidly adopted by major operators who began suspending transits.

In Saudi Arabia, an important Saudi Aramco refinery at Ras Tanura was also hit by bombardment on Monday morning.

Insurance Costs Rise as Hormuz Risk Grows

Insurers have already begun reacting to the deteriorating security environment by withdrawing war-risk cover for vessels transiting the Strait of Hormuz, according to Les Échos. Renegotiated premiums have risen from 0.25% to 0.375% of a ship’s value-an increase that can be significant for oil tankers often worth more than US$100 million. Similar cost inflation has been reported for Israeli ports.

While Europe is less exposed than many regions to Hormuz-linked imports, the strait remains a critical global chokepoint. Average reliance is estimated at 18% for Europe, compared with 50% for China and India, 65% for South Korea, and 72% for Japan.

Hormuz Bottleneck: Threat of US$100 Oil

Nearly 20% of global oil consumption passes through the Strait of Hormuz, and shipping there is now close to a standstill, BFM reported-an outcome that has alarmed markets.

The consultancy Eurasia Group warned that in the event of a prolonged interruption to flows through Hormuz, crude could quickly rise to US$100 a barrel, particularly if attacks spread to oil infrastructure in the region. Prices at that level have not been seen since the early period after Russia’s invasion of Ukraine, when energy markets delivered a major blow to the global economy.

Rerouted Tankers and Higher Freight Costs Add to Pressure

The commercial impact has been swift. The shipping giant Maersk has begun diverting vessels via the Cape of Good Hope, adding roughly 10 days to journeys. Les Échos reported that the daily charter rate for a very large crude carrier (VLCC) bound for China has surged to US$225,000 per day, up from US$33,000 at the start of 2026.

Iran has also moved to close the Strait of Hormuz, a route used not only for oil but also for LNG shipments.

OPEC+ Raises Output Quotas, but Concerns Persist

In an apparent attempt to calm markets, OPEC+-including Saudi Arabia and Russia-agreed on Sunday to increase production quotas, lifting them to 206,000 barrels per day in April.

That decision has not eased all concerns. Charu Chanana of Saxo Markets, quoted by Le Parisien, said the risk premium could linger: “With the entire Gulf region affected, the dissipation of this geopolitical risk premium could take time, given the region’s central role in global energy supply.”

Political Stakes for Donald Trump

Sustained high oil prices could also carry political implications in the United States. With petrol costs a sensitive issue for American voters, elevated crude prices may increase pressure on Donald Trump as midterm elections approach. Analysts suggest that if energy markets tighten further, Washington could face incentives to push for a faster end to hostilities to prevent prices from climbing even higher.