Gas prices spike amid fears of Middle East supply shock

European benchmarks have leapt over 50% as fighting increases shipping risks through the crucial Strait of Hormuz.

Gas markets around the world were rattled on Monday, with benchmark European natural gas prices rising sharply and broader energy markets on edge after Middle East tensions increased the risk to supplies via the critical Strait of Hormuz.

European benchmark gas futures surged by around 50% – their biggest single day move since March 2022 – after LNG tankers largely stopped transiting the Strait of Hormuz, the narrow waterway between Iran and Oman that carries about a fifth of global oil and gas shipments, over the weekend.

The spike was compounded by a drone strike on QatarEnergy’s major LNG complex at Ras Laffan, which forced production to be halted.

Crude markets also rallied, with Brent futures climbing to multi-month highs as the escalation further constrained energy flows from the region.

Across the Gulf, other energy sites have also been hit or temporarily shut, with producers suspending parts of their operations as a precaution. Saudi Arabia has reportedly paused activity at its Ras Tanura refinery following the attacks. With pipeline alternatives limited and shipping routes through the area stalling, traders are now pricing in the risk that supply lines could remain disrupted for an extended period.

Analysts warn that the turmoil could amount to the most serious shock to gas markets since the 2022 energy crisis. The EU is seen as particularly exposed. The bloc has already faced repeated jumps in energy costs since it scaled back Russian oil and gas imports following the escalation of the Ukraine conflict. Moving away from relatively cheap Russian pipeline gas has forced the bloc to lean more heavily on LNG deliveries, especially from the US. Now, with the heating season ending but storage sites less full than usual, the region requires substantial LNG imports over the summer to rebuild inventories ahead of next winter.

The rally comes as US President Donald Trump has indicated that military operations against Iran could continue for several weeks, while a number of major maritime insurers are preparing to stop covering war risks for ships entering the Persian Gulf.

Military strikes launched by the US and Israel against Iran on Saturday have shown no sign of easing. The intense attacks have reportedly killed Iranian Supreme Leader Ayatollah Ali Khamenei and other senior officials, including the head of the Islamic Revolutionary Guard Corps, while Tehran has responded with airstrikes against Israel and several Gulf states hosting US military assets. In a further sign of regional escalation, Lebanon’s Hezbollah has entered the fray with cross‑border attacks on Israeli military positions, prompting retaliatory airstrikes on the group’s infrastructure and command sites.

Analysts, including Goldman Sachs, estimate that a month‑long halt to shipping through the Strait of Hormuz could send European gas prices up by as much as 130% from current levels, putting renewed pressure on households and industry.

Kirill Dmitriev, Russia’s presidential envoy and head of the country’s sovereign wealth fund, argued that the latest price jump highlights the cost of Europe’s decision to move away from Russian fuel. In a social‑media post, he said EU gas prices “could more than double soon” and claimed that the bloc’s “strategic blunder of avoiding cheap and reliable Russian gas is backfiring.”