Market meltdown fears as Iran war jitters trigger 35% gas price hike

Vehicles queue to fill up at a petrol station in Eastville, Bristol. Disruption to petrol supplies h (Image: PA)

Iranian strikes on Qatar's Ras Laffan LNG hub – which supplies one-fifth of global liquefied natural gas – have triggered a 35% surge in European gas prices and sent oil soaring amid fears of prolonged energy chaos. The attacks, part of escalating retaliation in the Iran war, caused extensive damage, fires and a full shutdown at the world's largest LNG export facility.

QatarEnergy confirmed: "Missile hits led to sizeable fires and halted operations." This comes while the Strait of Hormuz remains largely closed to tankers. The European TTF benchmark jumped 35% in volatile trading, reflecting severe supply concerns for a continent already strained by reduced Russian gas. Brent crude climbed to $116.38 per barrel – up sharply from pre-war levels below $73 – while US WTI rose 1.1% to $96.45.

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Analysts warn: "The energy shock risks fuelling a debilitating wave of inflation worldwide." This warning comes as lasting production damage threatens the global recovery. Global stocks tumbled on the news.

London's FTSE 100 fell 1.7% to 10,134.02, Germany's DAX dropped 2.1% to 23,015.40 and France's CAC 40 shed 1.5% to 7,848.88.

In Asia, Tokyo's Nikkei 225 plunged 3.4% to 53,372.53. The Bank of Japan stated: "Middle East tensions and oil spikes require us to hold rates at 0.75%."

Seoul's Kospi lost 2.7%, Hong Kong's Hang Seng 2% and India's Sensex 2.7%. US markets extended declines, with the S&P 500 down 1.4%, the Dow 1.6% and Nasdaq 1.5%.

Oil prices are spiking (Image: Trading Economics)

Federal Reserve Chair Jerome Powell noted: "Uncertainty over oil prices and tariff impacts has kept rates steady." This caution arrives as US wholesale inflation hit 3.4%.

The strikes followed Israeli attacks on Iran's South Pars field – shared with Qatar – prompting Tehran's response against Gulf neighbours, including Kuwaiti refineries.

Qatar officials declared: "The assault is a direct threat to national security." Following this, Qatar expelled Iranian attaches. The UAE shut gas facilities after intercepting missiles.

Experts described the mix of high oil, rising US yields and a stronger dollar as: "A macro wrecking ball for Asian assets." Energy-importing nations like Japan, South Korea and Taiwan face acute strain.

With no swift end to disruptions in sight, traders anticipate more volatility. Persistent high prices could entrench inflation and stall global growth.

Markets remain on a knife-edge as the world awaits a potential retaliatory strike from the US-led coalition, with the White House already threatening to neutralise Iranian energy assets entirely.

The UK government has convened an emergency Cobra meeting to discuss the immediate impact on national energy reserves and the potential for a renewed cost-of-living crisis as wholesale costs filter through to the wider economy.

Traders now expect the Bank of England to pivot away from planned rate cuts as the inflationary outlook darkens significantly following this morning's unprecedented surge in energy prices.