Oil and Gas Prices Surge as Strait of Hormuz Disruptions Rattle Global Energy Markets

BY EMMANUEL OGBONNA

Global energy markets were jolted Monday as oil prices climbed sharply amid mounting disruption to tanker traffic through the Strait of Hormuz, the strategic maritime chokepoint that channels a significant share of the world’s oil and gas supplies.

U.S. benchmark crude rose 7.6% to settle at $72.12 per barrel, while Brent crude, the international standard, surged 8.6% to $79.11. European natural gas markets experienced even more dramatic swings, with futures jumping more than 40% after Qatar suspended liquefied natural gas production due to the escalating U.S.-Israeli military campaign against Iran.

The surge reflects growing uncertainty over how sustained hostilities could affect the steady flow of energy to global markets. Investors and policymakers alike are focused on the Strait of Hormuz, the narrow passage at the southern end of the Persian Gulf through which roughly 20% of global oil supply transits daily.

Shipping data firm Kpler reported a sharp drop in tanker traffic amid interference with satellite navigation systems in the region. The UK Maritime Trade Operations Centre said several vessels were attacked on either side of the strait and warned of heightened electronic interference affecting ship tracking systems. Oman confirmed that a bomb-laden drone boat struck a Marshall Islands-flagged oil tanker in the Gulf of Oman, killing one crew member.

Iran has signaled for years that it could target shipping in the strait if attacked, and recent events suggest that threat is being operationalized. The strait is not only vital for crude exports from Saudi Arabia, Iraq and the United Arab Emirates but also for Iran’s own shipments. Analysts note that Tehran exports approximately 1.6 million barrels per day through the same route, much of it destined for China.

Saudi authorities said they intercepted drones aimed at the Ras Tanura refinery near Dammam, one of the kingdom’s largest processing facilities. The refinery was reportedly shut down as a precaution. Markets are now watching closely for signs that the conflict could spread further to other oil-producing states in the Gulf.

While some pipelines bypass the Strait of Hormuz, their capacity is insufficient to handle the full volume that normally moves by tanker. For much of the region’s output, there is effectively no alternative route.

The strait is equally critical for liquefied natural gas exports. Qatar, one of the world’s largest LNG suppliers, announced it would halt production as fighting intensified. The move sent European gas futures for April delivery soaring to 45.46 euros per megawatt-hour on the ICE exchange. Europe has become increasingly reliant on LNG shipments from Qatar since losing significant volumes of Russian pipeline gas following Moscow’s invasion of Ukraine.

Higher oil prices have immediate political and economic implications, particularly in the United States, where gasoline prices are a sensitive issue. The cost of crude oil is the largest single factor determining retail gasoline prices. Analysts say increases in crude typically filter through to fuel pumps within about 20 days. A $10 per barrel rise in oil often translates into an increase of roughly 25 cents per gallon, according to research by the Federal Reserve Bank of Dallas.

The national average price for regular gasoline in the United States has already climbed by more than 5 cents in the past week to $2.98 per gallon, according to AAA, as the summer driving season approaches. Any sustained increase in crude prices could push those figures higher, potentially affecting consumer sentiment ahead of key political milestones.

In Europe, where fuel taxes account for a larger share of pump prices, the direct impact of crude fluctuations is somewhat muted. However, higher energy costs ripple through supply chains and can add to broader inflationary pressures. Holger Schmieding, chief economist at Berenberg bank, estimated that a sustained $15 per barrel increase could raise European consumer prices by around half a percentage point.

Some analysts view Monday’s spike as a risk premium reflecting geopolitical anxiety rather than immediate structural shortages. Price movements within a $5 to $10 per barrel range are typical in the early stages of major conflicts. If shipping disruptions prove temporary and infrastructure damage remains limited, prices could stabilize.

Schmieding suggested that oil might eventually return to the $65–$70 range once immediate fears subside. However, he cautioned that a prolonged or effective closure of the Strait of Hormuz would significantly alter that outlook, weighing on global growth while intensifying inflationary pressures.

Torbjorn Soltvedt, principal Middle East analyst at Verisk Maplecroft, described the attempted strike on Ras Tanura as a major escalation. He said Tehran appears intent on increasing the economic costs of the conflict for Gulf states such as Saudi Arabia and the United Arab Emirates, potentially to encourage them to press Washington and Jerusalem for de-escalation.

Market participants are now assessing the probability of further direct attacks on energy infrastructure. If additional facilities across the region were struck, analysts warn oil could quickly breach $80 per barrel and possibly move toward $90.

The trajectory of prices will hinge on the conflict’s duration and scope. A brief confrontation with rapidly restored shipping lanes may limit lasting damage. But a drawn-out campaign, especially one that significantly impairs tanker traffic through the Strait of Hormuz, would likely prolong volatility and amplify economic fallout far beyond the Middle East.