Skip to main contentOil and gas prices have surged to their highest levels since Russia’s full‑scale invasion of Ukraine in 2022, as the conflict in the Middle East enters its tenth day.
The latest spike followed confirmation that Mojtaba Khamenei, the more hardline son of former supreme leader Ayatollah Ali Khamenei, who died in US Israeli strikes, has been appointed as his successor, suggesting there is no immediate hope of a peace deal. Over the weekend, Israel struck Iranian oil facilities, while Tehran targeted energy infrastructure across the region and restricted access through the critical Strait of Hormuz.
Iranian authorities have warned they will “attack and set ablaze” any vessel attempting to navigate the Strait of Hormuz, a passage that typically handles around 20% of global oil and gas flows. As a result, shipping through this key corridor has largely halted due to severe operational risks and military threats from Iran. This disruption comes at a particularly worrying time, with European gas storage at historically low levels, making it increasingly difficult to refill stocks ahead of the winter season.
Qatar, a leading producer and exporter of oil and LNG, halted LNG production last week after its facilities were hit by “military attacks.” According to QatarEnergy, even if the conflict ended immediately, it would still take several weeks to months to restore normal production levels. This disruption has created a major supply shock in global gas markets, especially since U.S. LNG exports have limited spare capacity to make up for the shortfall.
Concerns over prolonged supply issues have driven gas prices sharply higher, with the Summer 26 contract rising above 150p/th this morning, an increase of about 19% compared with Friday’s closing price.
Brent crude briefly climbed to $119.50/bbl last night, a 29% increase, before easing after news emerged that G7 leaders plan to hold an emergency meeting today to address the sharp rise in oil prices. At present, crude is trading above $104/bbl as the conflict escalates, a surge that President Trump described as “short term” and “a very small price to pay.” Qatar’s Energy Minister, Saad al Kaabi, cautioned that all Gulf region oil and gas exporters may halt production within days. He also warned that if tensions with Iran continue in the coming weeks, oil prices could surge to $150/bbl
Should the Middle East situation stabilise quickly, some of the risk driven price premium could drop. However, any further escalation is likely to increase volatility again.
If you are concerned about your business energy prices and what these changes could mean, then reach out to our Trading and Risk team directly here.
Categories
Tags
Share this article
Explore our Energy services:
Monitoring & Targeting
Effective monitoring is central to embedding a low carbon approach within your organisation, as well as meeting any regulatory obligations. But, amid all the other operational pressures you are facing, we understand that you need laser sharp insight at the touch of the button.
Discover moreEnergy Management
Energy management is about being in control of how much you use, when and where. Our chartered energy managers are adept at embedding a best practice programme that ties in with an organisation’s objectives from both a commercial and ESG perspective.
Discover more
Abraham Moon
Envantage was recommended to Abraham Moon as a trusted energy and carbon consultancy partner. What began as support around Climate Change Agreements (CCA) and regulatory compliance quickly evolved into a joined-up programme covering carbon strategy, energy efficiency, procurement, and internal capability building.
Discover moreSubscribe to receive exclusive content and industry insights from our team of carbon and business energy experts, and our Daily & Monthly Market Updates.