Oil and gas prices climb sharply after Iran threatens shipping through the Strait of Hormuz, triggering global market turmoil and inflation fears.
Global energy markets were jolted on Tuesday as oil and gas prices climbed sharply following fresh threats from Iran over shipping routes in the Gulf. The spike comes amid escalating tensions involving Iran, the United States and Israel, raising fears of prolonged disruption to one of the world’s most critical energy corridors.
Brent crude rose by 3.2 per cent to reach $80 per barrel, extending gains recorded a day earlier. Natural gas prices saw an even steeper rise, jumping by nearly 30 per cent. Markets had already reacted strongly on Monday after US-Israel strikes on Iran and Tehran’s subsequent retaliation heightened geopolitical uncertainty across the region.
The latest surge was triggered by remarks from Ebrahim Jabbari, an adviser to the commander-in-chief of Iran’s Islamic Revolutionary Guard Corps (IRGC). In comments broadcast on state television, Jabbari warned that Iran would “set fire to anyone who tries to pass through” the strategically vital Strait of Hormuz. He further cautioned that ships entering the region would face a serious response.
The Strait of Hormuz is one of the most important maritime chokepoints in the world, with approximately 20 per cent of global oil and gas supplies passing through the narrow waterway. However, shipping traffic has reportedly slowed dramatically after several vessels were attacked in recent days, intensifying fears of a broader supply crisis.
Gas prices climbed to around 140 pence per therm, a rise that could soon be reflected in household energy bills. Analysts warn that sustained increases in wholesale gas costs may also fuel inflation, placing additional pressure on central banks already grappling with fragile economic conditions.
Adding to market anxiety, QatarEnergy - one of the world’s largest exporters of liquefied natural gas - temporarily halted production following reported military attacks on its facilities. This move compounded supply concerns and contributed to Monday’s sharp price increases.
The conflict has not only driven up energy prices but also sharply increased shipping costs. According to data from the London Stock Exchange Group, hiring a supertanker to transport oil from the Middle East to China surged to more than $400,000 on Monday - nearly double the rate recorded just a week earlier.
Sanne Manders, president of logistics technology platform Flexport, described the Strait of Hormuz as “effectively closed,” citing both safety concerns and insurance challenges. Shipping companies are reportedly reluctant to risk sending vessels through the area, while insurers are increasingly unwilling to provide coverage under current conditions. As a result, freight rates across global routes are expected to rise in anticipation of higher fuel and operational costs.
Risk research firm Avellon Intelligence warned that crude oil prices could surpass $100 per barrel if disruptions persist. Srinivaasan Balakrishnan, an analyst at the firm, suggested that if prices remain elevated at that level, US petrol prices could increase by up to 25 cents per gallon.
The geopolitical crisis is also weighing heavily on global stock markets. In Europe, the UK’s FTSE 100 index opened 1.4 per cent lower, while Germany’s DAX fell by 1.7 per cent. Asian markets experienced even steeper declines. Japan’s Nikkei closed down 3.3 per cent, with export-oriented companies such as Toyota, Panasonic and Sony among the worst performers.
Hong Kong’s Hang Seng and China’s Shanghai Composite both posted losses, while South Korea’s Kospi index dropped more than 7 per cent after reopening following a public holiday. Major South Korean firms including Hyundai, Samsung and SK Hynix saw their shares fall by as much as 10 per cent, reflecting investor concerns about the vulnerability of export-driven economies to geopolitical shocks.
In the United States, President Donald Trump is facing mounting pressure over the potential impact of rising fuel costs on American households. He is scheduled to meet Treasury Secretary Scott Bessent and Energy Secretary Chris Wright to assess the economic implications. Secretary of State Marco Rubio indicated that Washington would soon unveil measures aimed at mitigating the impact of higher energy prices.
In the UK, industry leaders have warned that motorists are likely to face higher pump prices if crude oil remains elevated. Alasdair Locke, chairman of Motor Fuel Group, noted that sustained increases in oil costs would inevitably translate into higher fuel prices.
Beyond fuel, higher oil prices could push up transportation and food costs, further intensifying inflationary pressures worldwide. Should inflation accelerate, central banks may be forced to delay interest rate cuts, adding another layer of uncertainty to an already volatile global economic landscape.
Source : BBC
Image source : AI Generated
