A full-scale energy market crisis is now underway across both oil and gas markets, as the Iran conflict simultaneously drives crude prices above $90 a barrel and pushes European natural gas prices to their highest levels in three years. The dual shock has created the most severe energy market conditions since the early weeks of the Covid-19 pandemic and is threatening to undo the progress made in bringing down global inflation.
On the oil side, Brent crude surged more than 25% in a single week — from around $72.50 to $91.89 per barrel — as the conflict disrupted tanker traffic through the Strait of Hormuz and created a storage crisis across the Gulf. Kuwait has already been forced to cut production at storage-full fields, and energy consultants warn that Saudi Arabia and the UAE face the same predicament within 20 days. A coordinated shutdown by the Gulf’s biggest producers would be unprecedented.
The gas crisis has been triggered by damage to Qatar’s LNG infrastructure from an Iranian drone strike. Qatar supplies roughly a fifth of the world’s LNG, and the loss of even a portion of that capacity is being felt acutely in European gas markets. The country’s energy minister warned that it could take weeks to months to resume full exports, even in the event of an immediate ceasefire — a timeline that has sent shockwaves through energy procurement teams across Europe and Asia.
Qatar’s minister also delivered the most dramatic oil price warning of the week, predicting that if the conflict continues, all Gulf exporters could halt production within weeks and oil could reach $150 a barrel. This is not hyperbole but a reflection of the physical realities of the storage crisis building across the region. When storage is full and shipping lanes are blocked, production must stop — and stopping is always easier than restarting.
Financial markets have registered the scale of the crisis with sweeping losses. Stock markets fell sharply across Asia, Europe, and the UK, while bond yields surged to multi-year highs. Central bank rate cut expectations were abandoned overnight. Airlines issued profit warnings, consumers face higher energy bills, and economists are once again reaching for their inflation calculators.