Iran has announced the closure of a crucial shipping route, the Strait of Hormuz, and threatens to set fire to any ships attempting to pass through. Ebrahim Jabari, a top adviser to Iran’s Revolutionary Guards commander-in-chief, conveyed the message that the strait is now off-limits, as reported by Iranian media. Recent explosions along the key oil export route have heightened tensions.
The Strait of Hormuz, situated between Oman and Iran, serves as a vital passage for approximately one-fifth of the world’s oil consumption. Last year, an average of over 20 million barrels traversed this route daily.
This development comes amid a spike in gas prices, the most rapid since the outbreak of conflict in Ukraine. The escalation followed Qatar’s decision to halt liquefied natural gas production due to attacks by Iran. Oil prices surged, and global financial markets reacted to the escalating conflict between Iran and US-Israeli forces.
European gas prices surged by 52% on Monday, the sharpest increase since the Russian invasion of Ukraine in March 2022. This surge was prompted by QatarEnergy’s announcement of production cessation following attacks on its facilities by an Iranian drone. Qatar, a major LNG producer, accounts for around a fifth of global supplies.
The price of natural gas for April delivery in London rose by approximately 43% to 115p per therm on Monday. In the UK, gas prices significantly influence domestic energy bills, signaling potential impacts on households in the upcoming months.
Neil Wilson, a strategist at Saxo UK, expressed concerns over European natural gas prices, emphasizing Qatar’s significant role as a top LNG exporter. Iran’s strategy appears to involve pressuring Gulf states to influence the US and Israel. Fears of energy supply disruptions intensified after strikes across the Middle East and ship attacks, causing global financial markets to falter.
London’s FTSE 100 index declined by 1.2%, closing at 10,780.11 points due to concerns over the growing conflict between Iran and US-Israeli forces. European markets also experienced losses, with France’s Cac 40 down by approximately 2.2% and Germany’s Dax falling by 2.4% on Monday. Wall Street saw a more cautious start, with the S&P 500 relatively stable and the Dow Jones dipping by around 0.1% at the close of European markets.