Oil Hits $114 Amid Global Market Turmoil, Iran Strikes Energy Hubs, Threatening Inflation

Global oil and natural gas prices surged sharply Thursday following coordinated attacks by Iran on key energy infrastructure in the Gulf region. The Iranian strikes targeted Qatar’s Ras Laffan liquefied natural gas (LNG) terminal, which accounts for roughly one-fifth of global LNG exports, as well as two oil refineries in Kuwait. Analysts warned that the disruptions, combined with the closure of the Strait of Hormuz to tanker traffic, could extend the current energy crisis and push prices even higher.

Brent crude, the international benchmark, climbed to nearly $114 per barrel, a significant jump from under $73 per barrel before the onset of the conflict. Meanwhile, European TTF natural gas futures rose 24% on Thursday, reflecting the sudden shortage of LNG supplies. The Ras Laffan terminal was forced to shut down after a drone strike, leaving shipments stranded as tanker routes through the Strait of Hormuz remain blocked.

The attacks sent ripples across global financial markets. U.S. and Asian stocks retreated as investors weighed the potential economic fallout. Wall Street indices fell sharply, with the S&P 500 down 1.4% to 6,624.70, the Dow Jones Industrial Average dropping 1.6% to 46,225.15, and the Nasdaq Composite sliding 1.5% to 22,152.42. Rising oil and gas prices, combined with expectations of higher U.S. interest rates, were cited as key factors driving market declines.

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In Asia, share prices also tumbled. Tokyo’s Nikkei 225 lost 3.4% to 53,372.53 as the Bank of Japan opted to keep its benchmark interest rate at 0.75%, highlighting Middle East tensions and volatile global markets. South Korea’s Kospi fell 2.7%, Hong Kong’s Hang Seng dropped 2%, and India’s Sensex shed 2.3%. Economists noted that higher energy costs, rising U.S. yields, and a stronger dollar are straining markets across the region.

U.S. energy benchmarks also posted significant gains. West Texas Intermediate crude rose 1.1% to $96.45 per barrel, while the Henry Hub natural gas contract increased 3.3%. Analysts warned that sustained disruptions in the Gulf could trigger broader inflationary pressures worldwide, especially in countries reliant on imported energy.

The conflict in the Persian Gulf comes amid broader geopolitical tensions. Iran’s attacks appear to be retaliation for Israeli strikes on its main natural gas field, escalating fears of a prolonged disruption in energy supplies. Global markets remain on alert as policymakers and investors monitor developments in the region, aware that prolonged instability could have far-reaching economic consequences.

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