Oil and Gas Prices Surge Amid Middle East Tensions and Disrupted Supply Routes

Energy markets have experienced a significant uptick in oil and gas prices following heightened conflict in the Middle East. Both Brent crude and US West Texas Intermediate (WTI) oil benchmarks saw sharp increases at the start of trading, with prices rising by over ten percent compared to the previous session. Brent crude peaked at $82.37 per barrel, marking its highest level since July 2024, while WTI reached $75.33 per barrel, the highest since June 2025. Although prices eased slightly as the trading day progressed, they remained approximately eight percent higher than prior levels.

European natural gas prices also reacted strongly to the geopolitical developments. The Dutch TTF gas contract, which serves as a benchmark in Europe, surged by 22 percent to EUR38.89 per megawatt hour. Despite this increase, the contract still traded below the peak values recorded during the cold snap in January.

Consumers in Germany have already felt the consequences of these price shifts. According to the German automobile club ADAC, fuel prices for E10 petrol and diesel climbed by five to six euro cents per liter since the previous Friday. The daily averages of EUR1.794 for E10 and EUR1.759 for diesel represent the highest levels in nearly two years, resulting in longer queues at fuel stations. Heating oil prices have also risen rapidly, with online platforms reporting prices exceeding EUR120 per 100 liters on Monday morning, compared to below EUR100 just a few days earlier. These prices were subject to considerable volatility throughout the day.

The primary driver behind these price increases is the Iranian blockade of the Strait of Hormuz, a critical maritime passage that links the Persian Gulf with the Gulf of Oman, the Arabian Sea, and the Indian Ocean. Approximately twenty percent of global oil production and a similar share of liquefied natural gas (LNG) shipments transit daily through this choke point. The majority of LNG transported through the strait originates from Qatar.

In response to the supply constraints, the OPEC+ alliance--which includes both OPEC member countries and other significant oil producers such as Russia--announced plans to increase daily oil production. This decision aims to mitigate potential shortages and curb excessive price hikes.

Further complicating the situation, Iran has reportedly launched attacks on oil facilities and tankers in the region. In one incident, Saudi Arabia's national oil company experienced a drone attack on one of its facilities, which authorities attributed to Iranian forces. While the drones were intercepted and destroyed, falling debris caused a fire at the site, prompting precautionary shutdowns of certain sections of the facility. However, Saudi officials stated that the country's overall oil production remained unaffected. Additionally, Iran's Revolutionary Guard claimed to have targeted three tankers from the United States and the United Kingdom with missiles in the waters around the Strait of Hormuz.

Economic analysts have warned that a prolonged closure of the Strait of Hormuz could push Brent crude prices closer to the $100 per barrel mark. Sustained high oil prices could, according to experts, add more than one percentage point to inflation in the eurozone and reduce economic growth by several tenths of a percent.

As the situation in the Middle East continues to evolve, global markets remain alert to further disruptions in energy supply and potential impacts on consumer prices and economic stability.