The European market reacted sharply to the escalation of fighting in the Middle East. Following reports of a near-total halt in tanker traffic through the Strait of Hormuz, gas futures jumped by 25% – the fastest increase since August 2023, Bloomberg reports, as of March 2. This was reported by ZAXID.NET, as reported by the PromPolitInform portal.
Analysts noted that investors fear large-scale disruptions in global energy supplies.
The Strait of Hormuz (connecting the Persian Gulf and the Gulf of Oman – editor’s note) is a strategic artery for global energy, as approximately a fifth of global liquefied natural gas (LNG) exports pass through it. Following Russia’s full-scale invasion of Ukraine, this route has become even more important for global energy trade. Although Asian countries traditionally purchase the bulk of Middle Eastern LNG, any disruptions simultaneously intensify competition for alternative supplies. This, in turn, pushes prices up globally, including in Europe. The situation is particularly sensitive for Europe. Following the end of the heating season, consumption has declined, and storage levels are low. Consequently, according to the publication, EU countries will have to actively import LNG during the summer to prepare for the coming winter.
The duration of the potential blockage is also a key factor determining the market situation. Tom Marcek-Manser, Director of Gas and LNG in Europe at Wood Mackenzie Ltd., noted that the longer the shipping restrictions continue, the higher the prices. Meanwhile, as Bloomberg notes, US President Donald Trump stated that the bombing of Iran could continue for another 4-5 weeks. Goldman Sachs analysts estimate that if the strait is closed within a month, gas prices in Europe could more than double. This would be a significant blow after the recent 19% decline in futures. Simone Tagliapietra, an analyst at the Bruegel Center, warned that this would complicate filling storage facilities and increase costs for industry.
Tensions have risen following US and Israeli strikes on Iran, to which Tehran responded with attacks on several countries in the region. LNG exporters from Qatar and the UAE are changing routes or delaying shipments. Israel has temporarily shut down some gas production capacity, forcing Egypt to seek additional sources of supply.
Although Iran insists it has no plans to close the strait, ships have already begun to bypass it, and Qatar has temporarily suspended some maritime shipments. According to Arne Lohmann Rasmussen, chief analyst at Global Risk Management, the European gas market is more vulnerable to a blockage of the Strait of Hormuz than the oil market. Against this backdrop, Dutch gas futures jumped 21% to €38.72 per MWh.
The Strait of Ormur between Oman and Iran is a critical hub for global energy supplies. According to Forbes, approximately 13 million barrels of oil per day will pass through it in 2025, accounting for approximately 31% of all maritime shipping. This route provides Saudi Arabia, Iraq, Iran, and the United Arab Emirates with access to the Gulf of Oman and the Arabian Sea. Any disruption to navigation impacts global energy prices, inflation, and fuel prices.
Iran has frequently threatened to close the straits, which has been a source of pressure for years. The situation escalated on February 28, when the US and Israel announced a major military operation against Iran. As a result, approximately 150 tankers were anchored in the Persian Gulf near the Strait of Hormur, with dozens more waiting on the opposite side. Massive US and Israeli strikes against Iranian targets effectively destabilized the region and triggered a shipping collapse.
As ZAXID.NET reported, 40 Iranian military commanders were killed in the February 28 strikes on Iran, including the Chief of the General Staff of the Iranian Armed Forces, General Abdulrahim Mousavi.
