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Energy prices spike after attacks on Middle East facilities
Wholesale gas prices in Europe and the UK surged by up to 25% on Thursday following missile strikes on key energy infrastructure in Qatar and Iran, disrupting global supply chains.
Market reactions and price movements
European gas prices reached a three-year high, while UK prices spiked 19% to 165p per therm, peaking earlier at nearly 183p. Brent crude oil climbed 10% to $119 a barrel before settling at $112 by midday.
Stock markets reflected investor anxiety, with Japan's Nikkei index falling 3.4% and London's FTSE 100 dropping 1.8% in morning trading.
Targets and retaliation
Iran's South Pars gas field-one of the world's largest-was struck on Wednesday, prompting Tehran to retaliate against Qatar's Ras Laffan liquefied natural gas (LNG) export facility. The attack caused "extensive damage," raising fears of prolonged supply disruptions.
Qatar, which produces a fifth of the world's LNG, had already halted production at North Dome (its name for the shared South Pars field) earlier in March due to the escalating conflict.
"This could last months. These facilities provide a fifth of the global supply of LNG, which is why the market is reacting so sharply,"
Matthieu Favas, commodities editor at The Economist
Iran's warning and global fallout
Iran's military vowed "decisive action" against any nation targeting its energy infrastructure, framing strikes on foreign facilities as a legitimate response. A statement via Tasnim, a news agency linked to the Islamic Revolutionary Guard Corps, declared:
"We will severely strike the origin of aggression at the earliest opportunity."
Qatar's interior ministry confirmed a fire at Ras Laffan was contained by 19:00 GMT Wednesday, with no reported injuries.
Supply concerns and geopolitical risks
Nick Butler, former BP strategy chief, warned that the attack on Ras Laffan would "almost certainly cut off LNG supply to the global market," with limited short-term alternatives. He added that markets now fear further escalation, citing uncertainty over U.S. influence in the region.
Iran also suspended gas exports to Iraq to prioritize domestic demand, a move disclosed by an Iraqi official to Reuters. Data from the Gas Exporting Countries Forum shows Iran consumes 94% of its gas production internally.
Western responses and limited relief
The White House temporarily waived the Jones Act-a 1920 law restricting U.S. maritime trade to American-built ships-for 60 days to ease fuel transport. Press Secretary Karoline Leavitt stated the move would allow "vital resources like oil and gas to flow freely."
However, U.S. maritime groups dismissed the impact, noting that shipping costs are not the primary driver of rising pump prices. Earlier efforts, including strategic oil reserve releases, have failed to stabilize markets.
