Energy prices surged and global stocks fell on Thursday as Iran escalated attacks on Gulf energy infrastructure, fuelling fears of supply shocks and rising inflation.
Brent crude briefly topped $115 per barrel, while European gas prices jumped as much as 35%, as markets reacted to the widening conflict.
Iranian missiles struck Qatar’s Ras Laffan—the world’s largest liquefied natural gas (LNG) hub—causing “extensive damage.” At the same time, drones hit a Saudi oil refinery on the Red Sea and sparked fires at two refineries in Kuwait, underlining the growing reach of the attacks.
The escalation has effectively shut down the Strait of Hormuz, a critical chokepoint through which around a fifth of global oil and gas supplies pass, intensifying concerns over prolonged disruption.
The spike in energy prices triggered a broad sell-off in equities. Tokyo fell more than 3%, while Hong Kong and Shanghai also declined. European markets were similarly hit, with London, Frankfurt, and Paris all down around 2%.
Federal Reserve Chair Jerome Powell said the impact of higher energy costs on inflation remains unclear, warning that it was too early to judge how long the shock would last.
Central banks are now under pressure as the energy surge risks feeding into inflation. The Bank of Japan has already warned of rising prices linked to fuel costs, while attention is turning to upcoming decisions from the European Central Bank and the Bank of England.
