Energy markets explode: Crude hits $114, gas jumps 35% after Iran targets Gulf fuel sites – The Times of India

European gas prices spike up to 35%

European natural gas markets saw the sharpest reaction, with the Dutch TTF benchmark, the region’s key gas contract, surging as much as 35% to around 74 euros before trimming gains. It was still trading about 24% higher on the day, according to AP.The spike followed two waves of Iranian strikes that caused “extensive damage” at Ras Laffan in Qatar, the world’s largest LNG hub. The facility, which handles roughly one-fifth of global LNG supply, was forced to shut after a drone attack.The disruption has been compounded by the near closure of the Strait of Hormuz, a critical shipping route for oil and gas. With tanker traffic severely restricted, LNG shipments from Qatar have been halted, tightening global supply.

Supply disruptions raise inflation concerns

The latest escalation comes as Iran intensifies attacks on energy infrastructure in Gulf countries following earlier strikes on its own gas facilities in South Pars. In addition to Qatar, two oil refineries in Kuwait were also targeted, reported AP.The disruption to the Persian Gulf’s energy network, a key supplier to global markets, has heightened fears that the current energy shock could be prolonged, with lasting damage to production capacity.Analysts warn that sustained high oil and gas prices could trigger a fresh wave of global inflation, complicating economic recovery and monetary policy.

Global markets react; equities fall

Financial markets reacted negatively to the surge in energy prices. Asian equities declined sharply, tracking losses on Wall Street.Japan’s Nikkei 225 fell 3.4% after the Bank of Japan held its benchmark interest rate at 0.75%, citing geopolitical tensions. In its policy statement, the central bank said: “in the wake of increased tension in the Middle East, global financial and capital markets have been volatile and crude oil prices have risen significantly; future developments warrant attention.”South Korea’s Kospi dropped 2.7%, Hong Kong’s Hang Seng declined 2%, and China’s Shanghai Composite fell 1.6%. Australia’s S&P/ASX 200 lost 1.7%, while Taiwan’s Taiex slipped 1.9%. In India, the Sensex also fell 2.3%.“The combination of higher oil, rising U.S. yields, and a stronger dollar is acting as a macro wrecking ball across Asian assets and currencies,” Stephen Innes of SPI Asset Management, told AP.

Wall Street declines amid inflation, rate concerns

US markets had already closed lower on Wednesday, with the S&P 500 falling 1.4%, the Dow Jones Industrial Average down 1.6%, and the Nasdaq Composite slipping 1.5%.Investor sentiment has been weighed down by rising inflation risks and reduced expectations of interest rate cuts. A report showed US wholesale inflation accelerated to 3.4% last month, indicating price pressures were building even before the conflict escalated.Federal Reserve Chair Jerome Powell acknowledged the uncertainty around the outlook. “We just don’t know,” he said, referring to oil prices and the broader economic impact of tariffs.

Dollar strengthens as uncertainty rises

Currency markets reflected the shift in risk sentiment, with US Treasury yields rising and supporting the dollar. The US currency has strengthened against major peers since the conflict began, though it edged slightly lower to 159.71 yen in early trade. The euro was marginally higher at $1.1467.Rupee during the intra day trade also breached the 93 mark hitting the lowest against Dollar at 93.36.

Volatility likely to persist

With key energy infrastructure under attack and critical supply routes disrupted, markets are likely to remain volatile. The scale of damage to facilities such as Ras Laffan and the duration of shipping disruptions through the Strait of Hormuz will be crucial in determining the trajectory of oil and gas prices.If disruptions persist, analysts say the global economy could face sustained energy-driven inflation and tighter financial conditions in the months ahead.(With inputs from agencies)