Global energy markets were rocked on Monday as the escalating US-Israel war with Iran sent Brent crude prices up 6.3% to $77 a barrel in late London trading. UK and European gas prices skyrocketed by around 40% in a single day, following a targeted Iranian drone attack that forced Qatar’s state-run energy company to shut down production at the world’s largest liquefied natural gas export facility.
Shipping Chokepoints and Travel Chaos
The Strait of Hormuz—a narrow waterway between Iran and Oman, crucial for transporting about 20% of the world’s oil—became the center of global anxiety after Tehran warned that no ships would be allowed through in the wake of US and Israeli strikes. While Iran stopped short of formally closing the channel, threats and attacks led to tankers piling up on either side, with many unable to get insurance for the perilous crossing.
Shipping giant Maersk announced it would halt all traffic through both the Strait of Hormuz and the Suez Canal, citing safety concerns. Meanwhile, the UK Maritime Trade Operations centre reported two deadly attacks on ships in the Gulf of Oman, with two crew members killed in five separate incidents over the past 24 hours. The travel industry also took a major hit, with thousands of flights cancelled and hundreds of thousands of passengers stranded—marking the worst air travel chaos since the Covid-19 pandemic.
Wider Economic Fallout and Market Turmoil
The surge in energy prices has sparked fears of renewed inflation, dashing hopes for imminent interest rate cuts in Western economies that are still recovering from the shockwaves of the Ukraine war. Although current European gas prices and oil remain below the peaks seen in 2022, analysts warn that prolonged disruption could push oil prices above $100 a barrel. Opec+ announced a modest output boost of 206,000 barrels per day for April, but much of this supply still relies on safe passage through the embattled Strait of Hormuz.
Global stock markets tumbled on Monday, though US markets clawed back some losses by the close. Investors rushed into safe havens, with gold futures jumping more than $100 and the US Dollar Index gaining 1%. “The scale [of Iran’s retaliation] has been a big, big surprise,” said Jorge León, head of geopolitical analysis at Rystad Energy.
With President Donald Trump warning that the conflict could last “for weeks,” economists and market watchers are bracing for more volatility ahead—and a possible domino effect that could ripple through economies worldwide if energy supplies remain at risk.
