Oil and natural gas prices soar as Iran attacks Gulf energy facilities

Global oil and natural gas prices soared on Thursday after Iran attacked a key natural gas facility in Qatar that can supply one-fifth of the worlds gas as well as two oil refineries in Kuwait.The attacks added to fears the energy crisis triggered by the closure of the Strait of Hormuz to tanker traffic may be longer and more extensive than feared, with lasting damage to oil and gas production.Brent crude, the international benchmark, rose to $116.38 per barrel, up from under $73 per barrel on the eve of the war.

The European TTF benchmark for natural gas prices traded 24 per cent higher on Thursday.The Iranian attack hit the Ras Laffan terminal for shipping out liquefied natural gas in Qatar. Qatar normally supplies some 20 per cent of the world’s consumption of LNG, which can be carried by ship. The facility shut down after a drone attack. The closure of the Strait of Hormuz to most tanker traffic also left the gas with nowhere to go.

If the disruptions from Iran’s attacks on its Gulf Arab neighbours’ energy infrastructure keep oil and gas prices high for long, they could create a debilitating wave of inflation for the global economy.

US benchmark crude oil gained 1.1 per cent to $96.45 a barrel early Thursday, while the Henry Hub future contract, the benchmark for US natural gas, gained 5.1 per cent. As oil and gas prices spiked, world shares retreated and US futures edged 0.2 per cent lower.

Germany’s DAX lost 2.1 per cent to 23,015.40 and the CAC 40 in Paris fell 1.5 per cent to 7,848.88. Britain’s FTSE 100 shed 1.7 per cent to 10,134.02.

In Asian share trading, Tokyo’s Nikkei 225 fell 3.4 per cent to 53,372.53 as the Bank of Japan opted to keep its benchmark interest rate on hold at 0.75 per cent, citing the war with Iran as one factor.

In its monetary policy statement the BOJ said that “in the wake of increased tension in the Middle East, global financial and capital markets have been volatile and crude oil prices have risen significantly; future developments warrant attention.” Higher oil prices are a heavy burden for Japan, which like South Korea and Taiwan depends on imports of most raw materials for industries that rely heavily on oil and its derivatives. The Kospi in Seoul lost 2.7 per cent to 5,763.22.In Hong Kong, the Hang Seng slipped 2 per cent to 25,500.58, while the Shanghai Composite index shed 1.4 per cent to 4,006.55.

Australia’s S&P/ASX 200 lost 1.7 per cent to 8,497.80 and Taiwan’s Taiex fell 1.9 per cent. In India, which has also suffered from shocks to supplies of oil and gas, the Sensex lost 2.7 per cent.“The combination of higher oil, rising US yields, and a stronger dollar is acting as a macro wrecking ball across Asian assets and currencies,” Stephen Innes of SPI Asset Management said in a commentary.

On Wednesday, the S&P 500 fell 1.4 per cent, flipping to a loss for the week so far. The Dow Jones Industrial Average dropped 1.6 per cent and the Nasdaq composite slid 1.5 per cent.The losses deepened after the Fed decided to keep its main interest rate steady, instead of resuming cuts meant to give the jobs market and economy a boost.“We just don’t know,” Fed chair Jerome Powell said about what will happen with oil prices, along with how long President Donald Trump’s tariffs will take to work their way fully through the system.

A report released Wednesday morning showed inflation pressures were already building before the war began. It said inflation at the US wholesale level unexpectedly accelerated last month to 3.4 per cent. In other dealings early Thursday, the US dollar fell to 159.10 Japanese yen from 159.88 yen. The euro rose to $1.1463 from $1.1453.